- Finance Secretary Carlos G. Dominguez III said in a statement Tuesday that the government remained prudent while borrowing more money to respond to COVID-19.
- The Philippines was forced by the coronavirus crisis to borrow a total of P1.22 trillion from January to April.
- While the government is borrowing more than usual this year, Dominguez said that the government was mindful of spending too much above its means.
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The coronavirus crisis pushed the Philippines to borrow a total of P1.22 trillion from January to April—even exceeding the P1.02 trillion in gross borrowings for the whole of 2019.
Finance Secretary Carlos G. Dominguez III said in a statement Tuesday that the government remained prudent while borrowing more money to respond to COVID-19, supplying the bulk locally, especially since the domestic financial system is very liquid.
Citing a Bureau of Treasury report, Dominguez said P982 billion or more than four-fifths of gross borrowing by the end of April was collected from the selling of treasury bills and bonds, in addition to the P300-billion repurchase deal between the Treasury and the Bangko Sentral ng Pilipinas.
Offshore bond issues as well as concessional loans from bilateral and multilateral lenders resulted in the remaining P237 billion in foreign borrowing during the first four months.
“Higher borrowings this year are crucial to letting the Duterte administration carry out a wide range of initiatives for the country to cope with the unexpected shocks unleashed by the COVID-19 pandemic and, before that, the eruption of the Taal Volcano,” Dominguez explained.
“The government has had to increase spending to implement its four-pillar socioeconomic strategy against COVID-19 even as strict mobility restrictions that national and local governments imposed since March to suppress the coronavirus’ spread had curtailed economic activity and led to a sizeable drop in the state’s revenue intake,” he added.
While the government is borrowing more than usual this year to fund healthcare, social protection, and other essential programs while revenues were down, Dominguez said that the government was mindful of spending too much above its means.
“Loans are not free money. They are advances that we, or even our children and their children, will have to pay for in some way in the future. The Duterte administration’s policy is to be careful not to borrow beyond sustainable levels, lest we fall into a vicious cycle of accumulating unmanageable debt, which might drastically increase our financing costs and plunge us deeper into debt,” said Dominguez.