MANILA, Philippines — The next administration must undertake fiscal consolidation, in which taxes could be raised and spending reduced, to ensure that debts accumulated during the pandemic are paid off, the Ministry of Finance (DOF) has said.
In an economic bulletin, DOF Chief Economist Gil Beltran said the next government should shore up its finances and increase collection to pay off debts accrued for the pandemic response.
Beltran said it would take the government at least four decades to complete both the amortization and the interest payments of debts accumulated during the pandemic.
“The loans are to be repaid over a 40-year period starting in 2020. This will require a fiscal consolidation program and better revenue collection,” Beltran said.
Based on the records, the DOF said the Philippines borrowed 1.3 trillion pesos in January to manage the contagion. Most of the funding of 559.08 billion pesos was generated by the Treasury Office through its bond issues.
The Asian Development Bank (AfDB) and the World Bank have granted the country 303.37 billion pesos and 291.95 billion pesos respectively to boost its resources during the pandemic.
The Philippines secured funding worth P66.01 billion from the Asian Infrastructure Investment Bank; 47.56 billion pesos from the Japan International Cooperation Agency; 28.96 billion pesos from the French Development Agency and 10.15 billion pesos from Korea Eximbank.
In addition, the country has received 2.74 billion pesos in grants from several channels, including 1.28 billion pesos from the Japanese government, 1.06 billion pesos from the World Bank and the European Union and 406.19 million pesos from the ADB.
According to the DOF, the Philippines has also received 76.44 million doses of COVID-19 vaccines through foreign donors. The lion’s share of vaccines donated at 65.33 million came from the COVID-19 Vaccines Global Access or COVAX facility.
On the bilateral side, the country received 11.11 million shots from China, 3.09 million from Japan and 700,000 from Australia. It has also secured vaccine shipments from the UK, Poland, South Korea, Argentina, United Arab Emirates, Russia and Brunei Darussalam.
Beltran said the government had to borrow from external sources to support the economy after posting its worst post-war drop in 2020 at 9.6%.
The country’s outstanding debt hit a record 12.09 trillion pesos in February due to double-digit increases in domestic and external obligations on an annual basis.