Finance Secretary Carlos Dominguez 3rd said there is no need for the national government to borrow more than it planned this year as he believes the Philippine economy will bounce back next year with the availability of coronavirus disease 2019 (Covid-19) vaccine.
“With the development of safe and effective vaccines by next year and their availability, we see no need to get out of the normal loan programs that we have planned,” Dominguez stressed during a television interview on Tuesday.
It can be recalled that the government plans to borrow P3 trillion from domestic and external sources this year. The amount is 195-percent higher than 2019’s P1.01 trillion.
Dominguez added that he also do not see the need for more central bank borrowing “at this point.”
In March, the national government and the Bangko Sentral ng Pilipinas (BSP) entered a repurchase agreement worth P300 billion. The BSP purchased P300-billion worth of government securities from the Bureau of the Treasury, which was already settled by the government last September 29.
This was followed by another P540 billion in new provisional advance of the national government to the central bank, to use as budget support amid the Covid-19 pandemic.
Dominguez, however, assured the public that reserve amounts in the central bank and other creditors are still available should the government need to make an additional borrowing to revive the economy.
“We are, first of all, assuming that an effective vaccine will be available sometime in the first half of next year. And that should inject a lot of confidence back into our country, and as a result of that, we do expect a big bounce back in our GDP (gross domestic product) growth next year,” he added.
It can be noted that the Philippines stayed in recession after domestic output slid by 11.5 in the third quarter, 16.9 percent in the second quarter, and 0.7 percent in the first. This brought the contraction in GDP to 10 percent in the first nine months.
For 2021, the government sees the economy recovering by 6.5 to 7.5 percent, taking into consideration the availability of Covid-19 vaccines by the middle of next year.
Latest data showed that national government’s gross borrowings in the first nine months of the year surged to P2.56 trillion, up 179 percent than the P917.28 billion in January-September 2019.
The government’s outstanding debt, meanwhile, slid to P9.36 trillion at end-September on smaller domestic borrowings.
According to the Department of Budget and Management’s “2021 Budget of Expenditures and Sources of Financing” report, state obligations will reach P10.16 trillion by end-2020, up 31.42 percent from the P7.73-trillion liabilities at the end of last year.