Philippines faces tough task to lower debt

MANILA, Philippines — Bringing down the Philippines’ outstanding debt, which is now close to P13 trillion, will be a tall order for the country amid the lack of tax measures that can significantly rake in revenues for the government.

In a briefing, UK-based The Economist Intelligence Unit (EIU) said the prospect of reducing the government debt would be challenging for the Philippines.

The national debt went up to a record high of P12.89 trillion as of end-July.

The country’s debt level, when measured against the gross domestic product (GDP), is at 62.1 percent in the second quarter, effectively remaining above the internationally accepted threshold of 60 percent.

Nonetheless, EIU Asia analyst Syetarn Hansakul said such a ratio would come down below 60 percent over the medium term.

“The reason is because the GDP growth will continue at a relatively high rate,” Hansakul said, adding that “the public debt will remain high, but GDP will also grow at a high rate and help them bring the ratio down. ”

However, Hansakul warned that a disappointing GDP in the coming quarters would impact on the Philippines’ goal to reduce public debt.

Finance chief Benjamin Diokno earlier maintained that the national debt remains within manageable levels.

The government targets to bring down the debt-to-GDP ratio to below 60 percent in three years as it banks on structural reforms and an enhanced tax system.

Still, the Philippines will continue its borrowing program at over P2 trillion, at least in the short term.

The indicative financing program of the government until 2025 shows that the Philippines will borrow P2.21 trillion by 2023, the same level it plans to raise this year.

This will increase by 9.56 percent to P2.418 trillion by 2024 and will decline by 14 percent to P2.1 trillion by 2025.