COVID-19 debt payoff to take 2 generations

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MANILA, Philippines — It will take 40 years, or about two generations, to repay the P1.31 trillion in international debt that the Duterte administration borrowed for the COVID-19 pandemic, the Department of Finance (DOF) stated on Saturday.

Repaying the money owed that piled up resulting from COVID-19 “will require a fiscal consolidation program and improved revenue collection,” stated retired Finance Undersecretary Gil Beltran, now the DOF’s chief economist, in an financial bulletin.

As of January, the Philippines borrowed $25.7 billion (about P1.31 trillion) from banks and bilateral companions, however a lot of the P1.31-trillion debt have been sovereign bonds, amounting to P559.1 billion, that can mature over the following years till 2060.

Recession reversed

Loans prolonged by the Asian Development Bank (ADB) reached P303.4 billion; the World Bank’s International Bank for Reconstruction & Development, P291.9 billion; Asian Infrastructure Investment Bank, over P66 billion; Japan International Cooperation Agency, P47.6 billion; Agence Française de Dévelopement, P28.9 billion; and the Export-Import Bank of Korea, P10.2 billion.

The Philippines additionally secured $54.1 billion, or P2.74 trillion, value of grants, which it needn’t repay, from the Japanese authorities, ADB, European Union and the World Bank, Beltran stated.

“The loans and grants raised from bond auctions and grants helped the country in fighting the COVID-19 virus and were instrumental in restoring economic growth in 2021,” Beltran stated.

The Philippine economic system grew by a better-than-expected 5.7 p.c final yr, reversing its worst annual recession post-war in 2022, when gross home product (GDP), or the entire items and companies produced within the nation, slid by a document 9.6 p.c on the peak of the lockdowns.

High debt-to-GDP ratio

“The Filipino people are grateful to development partners who provided P2.7 billion in grants and 76.4 million doses of vaccines,” Beltran added.

The 76.4 million vaccines got here from the COVID-19 Vaccines Global Access facility, in addition to China, Japan, Australia, United Kingdom, Poland, South Korea, Argentina, United Arab Emirates, Russia and Brunei, Beltran added, citing knowledge from the United Nations Children’s Fund.

As of end-February, the nationwide authorities’s excellent debt reached P12.09 trillion, and was projected to hit P13.42 trillion by yearend.

Despite expectations of 7-percent to 9-percent GDP progress this yr, the Philippines’ debt-to-GDP ratio was anticipated to rise to 60.9 p.c of GDP, from the 16-year excessive of 60.5 p.c final yr. For rising markets just like the Philippines, economists thought of public debt ratio of 60 p.c of GDP as manageable.

Finance Secretary Carlos Dominguez III stated the DOF had virtually completed a fiscal consolidation program, consisting largely of recent and better taxes, that the Duterte administration will recommend to the following administration.

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