Finance Secretary Ralph Recto
MANILA, Philippines — The Marcos administration’s fiscal position might be “at risk” from the higher US tariffs, as the government might have to ramp up spending to mitigate the impact of heightened global trade protectionism on the local economy.
BMI Research, a unit of the Fitch Group, said in a commentary that it is sticking to its current forecast of 5.9 percent deficit-to-gross domestic product (GDP) ratio for the Philippines this year on expectations that the state’s fiscal consolidation will be “delayed”.
“If anything, the likelihood of the government having to incur a larger fiscal deficit has risen significantly against the backdrop of heightened geopolitical uncertainty,” BMI said.
“We think lawmakers will employ a policy mix, rather than relying solely on increased public spending, to prop up the economy. Moreover, we are of the impression that the Philippines will succeed in negotiations with the Trump administration, leading to a reduction in the final tariff rate,” it added.
READ: Trump sets 17% tariff on Philippine goods coming to America
The reciprocal tariffs were supposed to take effect on April 9 but U.S. President Donald Trump hit the pause button.
READ: Trump pauses most of his tariffs
