DOF prepares budget plan to restore targets by 2024

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The finance ministry said over the weekend it was developing a budget consolidation plan to reduce the public deficit and bring economic growth back to 2016-2019 levels by 2024 or 2025, Finance Secretary Carlos said. Dominguez III during an online briefing. “The budget consolidation plan is an ongoing project that we launched about a month and a half ago. A first official document was published by [Undersecretary] Gil [Beltran]… This is the first document on our fiscal consolidation. We will provide more details on this plan, ”Dominguez told reporters. “It is an evolving plan, which we will leave to our successors in the next administration. It is our duty and we will do it, ”said Dominguez. Fiscal consolidation refers to the policies undertaken by the government to reduce the budget deficit and the accumulation of outstanding debt. It is not intended to eliminate tax debt. Beltran said that, based on DOF estimates, if all measures and policies were adopted, the government would return to the usual deficit by 2025. “We can do even better if the economy rebounds quickly,” he said. -he declares. “The debt will not be far from 60 percent. It will go over that a little bit, but it will come back to around 60% and below that… It will go back to the usual… ”, said Beltran. Beltran said the economy is expected to grow once the lockdowns are eased. “Because the factors of production are there, they cannot move. Once you remove the blockages, checkpoints and restrictions, the economy will boom, ”he said. Beltran said the return to the pre-pandemic level of economic growth – where GDP growth averages over 6% – could take place before 2025, “if the next administration is swift.” “If they’re as fast as this administration, then we can do it by 2024,” he said. Beltran said the Philippine economy was more resilient than its peers in the region and that by 2025 the country would be able to catch up and return to the usual growth rate and income level before the pandemic. Dominguez said the pandemic had not destroyed the factors of production, but “it has just quarantined it”. He said that once the restrictions are lifted, the economy will grow at a very healthy pace. Dominguez said the DOF was considering two options in the plan. One is to cut spending like Indonesia has done. “Indonesia has already said that ‘we have to reduce our budget to keep our deficit at a reasonable level’,” he said. Dominguez said the other way is to increase government revenue. Dominguez said the period of fiscal consolidation would be difficult, but it would be favorable amid the prevailing low interest rates. “So you have to see how the plan evolves. Like I said, it depends on how long this pandemic lasts. Fortunately, we are in a relatively good position, ”said Dominguez. Dominguez said the national government debt, as a proportion of gross domestic product, is expected to settle at a still manageable level of 58.7% this year. He said the government should return to the path of fiscal consolidation once the virus is contained and public spending normalizes to pre-COVID levels. Debt watcher Fitch Ratings said in a previous report that the country’s general government deficit widened to 5.4% of GDP in 2020, from 1.7% in 2019, due to relief spending. linked to COVID and the contraction of GDP. The rating agency expects the government deficit to GDP ratio to rise to 8.8% in 2021 before dropping moderately to 6.4% in 2022 and 5.6% in 2023. % in 2021 and 54.5% in 2022, lower than the medians of 57% and 58.7% among “BBB” countries.

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