Finance chief: RP is not bankrupt

CEBU, Philippines - Outgoing finance secretary Margarito Teves yesterday denied reports that the Philippines is bankrupt.

In a press conference yesterday, Teves said the statement of Senator Francis Escudero that the Philippines has a budget deficit of P340 billion has no basis.

“How did he arrived such figures? Pakitanong lang sa kanya. As of May this year, our budget deficit is still at P162 billion,” Teves said.

Teves argued that if the country is indeed bankrupt, international credit companies would not have given the Philippines an “improved” credit ranking.

“We are managing our debt. Never in history that the country is remiss in paying its debt. We are not bankrupt. If we are bankrupt, then why do the international credit companies allow us to borrow?” Teves said.

Teves was in Cebu to deliver the Department of Finance Terminal Report during the 19th Visayas Area Business Conference. The report was also submitted to outgoing President Gloria Macapagal – Arroyo.

In the report, DAF said it has pursued the implementation of the Reformed Value Added Tax Law and privatization of big-ticket government assets, which resulted to the grant of $21 million or P1.1 billion by the Millenium Challenge Corporation.

Teves also took pride in DOF initiatives that improved the country’s gross domestic product by reducing deficit from P187.1 billion in 2004 to P12.4 billion in 2007.

Teves explained there were a number of external factors that were “beyond our control that eventually burdened the Philippine economy from 2008 to 2009.”

He said these factors are the reasons why the budget deficit increased once again from P12.4 billion in 2007 to P68.1 billion in 2008 and eventually to P298 billion in 2009.

Despite this, Moody’s Investors Services reportedly upgraded the country’s sovereign credit rating from “high-risk credit rating of B1 negative” to “low-risk credit rating of Ba3” in 2009. Teves said this only shows that the country had a “high degree of economic resiliency amid the global crisis.”

To restore revenue gains, Teves recommended that the new administration legislate revenue enhancement and financial sector reform measures such as increasing Value Added Tax gradually from 12 percent to 15 percent.

He said the new government must also consider privatization of government assets and strengthen government measures to convert cases to prosecution and conviction.

“We need to go back to the path of fiscal consolidation to reduce our reliance on debt. We should achieve fiscal consolidation through improved revenue collection and not reduction in expenditures because we still need to increase our level of spending to achieve and sustain economic growth, improve our competitiveness and raise the quality of life of our people,” the DAF report reads. (FREEMAN NEWS)