Philippines Government Confident in Debt Repayment Capacity, Denies Revenue Shortfall Concerns

THE government currently has sufficient revenues to finance its debt obligations as it seeks to manage rising borrowings through tax reforms and other fiscal measures, according to the Palace. “As of now, the debt involves long-term repayment. So, it does not have to be paid off immediately. Payments can be made in installments to cover both the interest and the principal,” Palace Press Officer Clarissa A. Castro told reporters on Monday. “The government’s current revenues are sufficient to meet our debt obligations on time,” she said in Filipino. The Bureau of the Treasury reported that national government outstanding debt reached a record P19.39 trillion at the end of July, up 1.7% from P19.07 trillion a month earlier. The increase was driven mainly by net availment of domestic and external debt, as well as the revaluation of foreign currency-denominated obligations following movements in the peso. Ms. Castro said the proposed Promoting Growth, Revenue, and Equity towards Socio-Economic Sustainability (ProGRESS) Bill is among several tax reform measures being considered to help manage public debt. “Lowering income taxes for ordinary workers and small businesses gives them the opportunity to use their savings for their needs. When money circulates, it stimulates economic activity, potentially leading to higher revenues,” she said. Ms. Castro said the government is also studying proposals involving higher excise taxes on distilled spirits, e-cigarettes, vape devices and novel tobacco products, as well as taxes on plastic products and automobiles. “These are just a few of the potential reforms to better manage the government’s current public debt, much of which was inherited from previous administrations,” she added. The Department of Finance has said the proposed ProGRESS Bill seeks to provide tax relief while strengthening government revenue capacity. Its proposals include raising the annual personal income tax exemption threshold to P350,000 and introducing revenue-enhancing measures on products with health and environmental costs. — Erika Mae P. Sinaking