Close  

Infra buildup seen jacking up debts

DOF says benefits to outweigh cost
By: - Reporter / @bendeveraINQ
/ 05:10 AM February 01, 2018

The ambitious “Build, Build, Build” is seen further jacking up the government’s already record-high debt stock in the near term but the long-term impact of improved infrastructure will eventually outweigh the cost of rolling them out, the Department of Finance said.

In an economic bulletin, the DOF noted that the government’s outstanding debt jumped 9.2 percent to P6.7 trillion in 2017 due to the “surge in domestic debt following the issuance of retail treasury bonds (RTBs) in the last quarter of 2017.”

ADVERTISEMENT

The government sold P255.4 billion worth of five-year RTBs in December, the biggest issuance to date.

DOF officials had said proceeds from the RTB sale would be used to finance the infrastructure rollout under “Build, build, build.”

FEATURED STORIES

In April, the government also raised P181.9 billion from RTBs.

In the first 18 months of its term, the Duterte administration made three RTB issuances.

The DOF nonetheless said “despite the rise in the debt stock, its proportion to GDP [gross domestic product] has been maintained at 42.1 percent as nominal GDP also surged by 9.1 percent.”

Finance Undersecretary and DOF chief economist Gil S. Beltran earlier said the share of outstanding government debt to the economy last year remained the lowest since 1980.

The ratio has declined from 51.5 percent in 2012, 49.2 percent in 2013, 45.4 percent in 2014, 44.7 percent in 2015 and 42.1 percent in 2016, Bureau of the Treasury data showed.

“From a high of nearly 75 percent in 2004, the debt-to-GDP ratio was drastically reduced to below 45 percent, owing to prudent debt management, fiscal discipline, and economic growth,” the DOF noted.

The debt-to-GDP ratio measures the capacity of an economy to pay ITS debts.

ADVERTISEMENT

But the DOF admitted that “in the short-term, the government’s ’Build, Build, Build’ program may exert upward pressure on the debt stock.”

Economic managers said the program would be financed by foreign borrowings (official development assistance (ODA) and loans) and the additional revenues to be generated by the Tax Reform for Acceleration and Inclusion (TRAIN) Act.

Still, the DOF maintained that “in the medium- to long-term, a sustainable high economic growth rate brought about by better infrastructure will outrun the growth of debt.”

The administration aims to reduce the debt-to-GDP ratio to 37.7 percent by 2022.

Read Next
LATEST STORIES
MOST READ
Don't miss out on the latest news and information.
View comments

Subscribe to INQUIRER PLUS to get access to The Philippine Daily Inquirer & other 70+ titles, share up to 5 gadgets, listen to the news, download as early as 4am & share articles on social media. Call 896 6000.

TAGS: Build Build Build, debt stock, Department of Finance, domestic debt, Infrastructure, retail treasury bonds (RTBs)
For feedback, complaints, or inquiries, contact us.
entertainment

Carla Abellana rushed to hospital in Japan

November 14, 2019 11:27 AM

newsinfo

Demolition of structures on Boracay beach continues

November 14, 2019 11:13 AM

newsinfo

Customs seizes P4.4 M smuggled sugar

November 14, 2019 10:51 AM

newsinfo

4 ‘big-time’ pushers held in Quezon drug sting

November 14, 2019 10:32 AM



© Copyright 1997-2019 INQUIRER.net | All Rights Reserved

We use cookies to ensure you get the best experience on our website. By continuing, you are agreeing to our use of cookies. To find out more, please click this link.