DOF: Debt pile could have been bigger

MANILA, Philippines — The national debt would have soared to an all-time high of P15.4 trillion by the end of 2022 had the government caved in to legislation to provide additional stimulus to the poorest households, according to the Department of Finance.

DOF chief economist Gil Beltran yesterday said the government exercised fiscal discipline at the height of the pandemic by blocking proposals that require new appropriations.

Beltran said the debt pile would have surpassed the P15-trillion level had the government yielded to congressional pressure to pass stimulus and welfare measures.

“We spent what we had to, but not more than what we could afford. In fact, had we acquiesced to pressure for us to spend more, our debt would have increased P2.2 trillion more and reached P15.4 trillion,” Beltran said.

In particular, the DOF opposed providing VAT exemptions for electricity, fuel and LPG as sought by the Makabayan bloc in the House of Representatives. Further, it stood up against abolishing certain taxes that would have cut revenue collections during the pandemic.

Likewise, the DOF rejected proposals to provide additional ayuda or cash subsidies for the poor under stimulus programs like Bayanihan 3 as proposed by economist lawmakers Joey Salceda of Albay, Stella Luz Quimbo of Marikina and Sharon Garin of AAMBIS-OWA party-list.

The DOF also turned down proposals to exclude the 13th-month pay and performance-based bonus from taxable income as filed by Deputy Speaker Vilma Santos-Recto and Tarlac Rep. Victor Yap.

“The government did not support several stimulus bills – each proposing hundreds of billions of additional appropriations – precisely because we understood that it would translate into further increases in the deficit and debt,” Beltran said.

On the other hand, the finance official said the DOF worked with Congress in finding the budget to fund the first and second Bayanihan bills. The agency, however, made sure that both stimulus packages delivered social interventions to the most vulnerable only.

The DOF even blocked the passage of the third Bayanihan law requiring a total of P401 billion in financing. More than half at P216 billion was dedicated for the distribution of P2,000 in ayuda to each Filipino.

The proposal also devoted P54.6 million for the pension arrears of retired military and uniformed personnel; P30 billion for social safety nets of families hit by the pandemic; and P30 billion also for programs intended to steady food prices and supply.

“Aware of the effects of additional spending on our borrowings, the DOF worked closely with our legislators to limit the interventions under Bayanihan 2 to P140 billion, despite the objections of many other stakeholders,” Beltran said.

Ateneo de Manila University economics professor Leonardo Lanzona said state spending and, in the case of the Philippines, national debt would go up when the government introduces social security to protect its people from economic shock.

“Any form of social security is expected to increase expenditures and, as in our case, debts. The solution is to introduce programs that can increase productivity at the same time so that benefits of this growth can be distributed,” Lanzona told the STAR.

“In other words, the government should have pursued a stimulus program at the start in order to sustain social security. Even up to now, no such program has been instituted. Structural reforms that have been passed are evidently not enough,” he said.

Even without additional spending, the government’s debt pile soared to P12.76 trillion as of April and may hit P13.42 trillion by the end of the year.

Worse, the outstanding debt, when measured against the gross domestic product, soared to a 17-year high of 63.5 percent as of the first quarter.