Repaying the COVID-19 debt will take 2 generations

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MANILA, Philippines — It will take 40 years, or about two generations, to repay the 1.31 trillion pesos foreign debt the Duterte administration incurred for the COVID-19 pandemic, the Ministry of Finance (DOF) said on Saturday. ).

Repaying the debts that have accumulated due to COVID-19 “will require a program of fiscal consolidation and improved revenue collection,” said retired Undersecretary for Finance Gil Beltran, now chief economist of the DOF, in an economic bulletin.

By January, the Philippines had borrowed $25.7 billion (about 1.31 trillion pesos) from banks and bilateral partners, but most of the 1.31 trillion peso debt was in sovereign bonds , in the amount of 559.1 billion pesos, which will mature in the next few years. until 2060.

Recession reversed

Loans granted by the Asian Development Bank (ADB) reached 303.4 billion pesos; the World Bank’s International Bank for Reconstruction and Development, 291.9 billion pesos; Asian Infrastructure Investment Bank, more than 66 billion pesos; Japan International Cooperation Agency, 47.6 billion pula; French Development Agency, 28.9 billion pesos; and the Korea Export-Import Bank, 10.2 billion pesos.

The Philippines has also secured $54.1 billion, or 2.74 trillion pesos, in grants, which it does not need to repay, from the Japanese government, the ADB, the European Union and the World Bank, Beltran said.

“Loans and grants obtained through bond auctions and grants have helped the country fight the COVID-19 virus and have been instrumental in restoring economic growth in 2021,” Beltran said.

The Philippine economy grew better than expected at 5.7% last year, reversing its worst annual post-war recession in 2022, when gross domestic product (GDP), or total goods and services produced in the country, slipped by a record 9.6% at the height of the lockdowns.

High debt-to-GDP ratio

“The Filipino people are grateful to the development partners who provided 2.7 billion pesos in grants and 76.4 million doses of vaccines,” Beltran added.

The 76.4 million vaccines came from the COVID-19 Global Vaccine Access Facility, as well as China, Japan, Australia, UK, Poland, South Korea , Argentina, the United Arab Emirates, Russia and Brunei, Beltran added, citing data from the United Nations Children’s Fund.

At the end of February, outstanding national government debt reached 12.09 trillion pesos and is expected to reach 13.42 trillion pesos by the end of the year.

Despite expectations of GDP growth of 7-9% this year, the Philippines’ debt-to-GDP ratio is expected to hit 60.9% of GDP, up from 60.5%, its highest level in 16 years last year. . For emerging markets like the Philippines, economists considered a public debt ratio of 60% of GDP to be manageable.

Finance Secretary Carlos Dominguez III said the DOF has nearly completed a fiscal consolidation program, consisting mainly of new, higher taxes, which the Duterte administration will propose to the next administration.


Paying record PH debt: Duterte team sees more taxes as a way out

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