Focus more on long-term investments than debt payments

THE CHAIRPERSON  of the House Ways and Means Committee on Tuesday said while the country's debt levels are still manageable, the government should be investing more in long-term, growth-creating programs rather than debt payments.  

Albay Representative Joey Salceda emphasized the need to bring the infrastructure and long-term investments to a healthy level than debt payment.

He, however, pointed out that the capital outlays for the fiscal year 2022 is PHP1.019 trillion, or 20.3 percent of the national budget, or around 5.6 percent of the gross domestic product (GDP). This contrasts with the debt service of around 5.9 percent of GDP.

"Infrastructure and long-term investments should be bigger than debt payment... I am reassured by the statements of all major presidential candidates who want to keep the Build, Build, Build program," he said.

According to the latest Bureau of the Treasury (BTr) data as of end-December 2021, national government outstanding debt stood at PHP11.73 trillion, down 1.7 percent from the PHP11.93 trillion debt balance as of end-November 2021.

He said the government should also keep interest payments low.

"The current Treasurer of the Philippines has been very successful at keeping the average interest rate on government debt very low – with or without crisis. One thing to watch is the appointment of the next National Treasurer by the next President," he said.

He said the next president has to both raise new taxes and improve tax administration in order to ensure there would be enough funds for both debt payments and adequate social services.

"The rich have gotten richer during the pandemic, and this is common experience. A study on the effects of five pandemics between 2003 and 2016 finds that on average, income inequality in affected countries increased over the five years following each event, with the effect being higher when the crisis led to contraction in economic activity, like Covid-19. So, our next round of tax increases will have to fall on the wealthy," he said.

He said President Rodrigo Roa Duterte’s administration is poised to become the best tax collector as a share of GDP since former president Fidel V. Ramos.

"If our tax policymakers in the next government can sustain the kind of tenacity and decisiveness with which our committee did tax reform, we should be in a much better position to deal with our debt," he said. ( Filane Mikee Cervantes)