The “Dutertenomics” thrust of “Build, Build, Build” aimed at ramping up infrastructure development, which critics compare to former President Marcos’ public investment program, would not result in a debt crisis similar to the one that “plagued” the economy in the early 1980s, the Department of Budget and Management (DBM) said Friday.
Also, amid expectations of sustained economic growth in the medium term, the country’s debt position would remain stable despite the planned increase in borrowings to fund the Duterte administration’s ambitious pipeline of infrastructure projects, the DBM said in a statement.
“Prior to the crisis in 1983, capital outlays as a share of gross domestic product (GDP) hovered at 5 percent. This is comparable to the projected capital investment program of the Duterte administration,” the DBM said.
For 2017, capital outlays as a share of GDP had been programmed at 5.7 percent, while the infrastructure spending-to-GDP ratio was at 5.3 percent.
The capital outlays-to-GDP ratio had been projected to rise to 7.5 percent by 2022, alongside an increase in the share of the infrastructure budget to 6.9 percent of GDP.
But the DBM said a difference lies in the sense that “the Duterte administration is more focused on infrastructure rather than other capital outlays such as corporate equity and capital transfers to local government units.”
Also, “economic conditions have changed that will enable the Philippine economy to weather external headwinds and avoid an economic/debt crisis,” the DBM added.
“Lending rates are at an all-time low; the Philippines gross international reserves are hefty; its macroeconomic fundamentals are sound with declining debt-to-GDP ratios and prospective growth rate of 7-8 percent pegged for the medium-term. These factors cannot be said for the years leading up to the 1983 Philippine economic/debt crisis, which led to skyrocketing debt-to-GDP ratios and debt service payments,” the DBM noted.
As such, the DBM claimed that “concerns over a looming debt crisis, as a result of the Duterte administration’s ‘Build, Build, Build’ program, are unwarranted.”
“Economic conditions have changed for the better, and we have learned from the mistakes of the past,” the DBM said. —BEN O. DE VERA