MANILA, Philippines — President Marcos’ economic team aims to reduce the national debt’s share of the country’s gross domestic product (GDP) to 52.5% by the end of the administration in 2028.
Finance Secretary Benjamin Diokno said the debt-to-GDP ratio would start to normalize from the current 17-year high of 63.5%.
For this year, the debt-to-GDP ratio is expected to decline to 61.8% and further decline to 61.3% in 2023. In 2024, the ratio is estimated at 60.6%.
This will reach the internationally accepted threshold by 2025 at 59.3%. Further declines are seen by 2026 and 2027 at 57.7%.
Once Marcos’ term ends in 2028, the debt-to-GDP ratio is expected to reach 52.5%.
“By the end of the Marcos years, we expect the national debt-to-GDP ratio to be below 60%, which is the threshold,” Diokno said.
“This type of debt structure is nothing to worry about, we are still one of the lowest even in emerging economies,” he said.
Despite the expected decline, Diokno argued that returning to pre-pandemic levels is not a priority.
It was in 2019, under President Rodrigo Duterte, that the Philippines experienced its lowest debt-to-GDP ratio at 39.6%.
“Given where we come from, it would be a mistake on our part to shoot for this level. I think we need to prioritize the growth and needs of our people first rather than going back to that number” , said Diokno.
“It’s not crucial for us to go back to 39%. We must prioritize the needs of Filipinos,” he said.
Diokno argued that the way to get the country out of debt is simply to grow the overall economy at a much faster rate.
In addition to solid economic expansion, the government will also focus on improving tax administration.
Diokno said earlier that the Marcos administration would not lean towards imposing new or additional taxes amid the still-unfolding pandemic.
“The biggest source of revenue growth will be economic growth. We will ensure that growth is faster and more widespread. That’s where most of the tax revenue will come from,” Diokno said.
“The faster the economic growth, the faster the revenue effort. We are confident that will be enough,” he said.
For the next few years, Diokno pointed out that the government will increase the domestic share in terms of the funding mix.
The government plans to borrow 80% from local lenders and the remaining 25% from abroad. The current mix is a ratio of 75:25.