The Ministry of Finance (DoF) said the government’s fiscal measures will return to pre-pandemic levels by 2025 or sooner if all measures in its fiscal consolidation plan are followed.
“The budget consolidation plan is an ongoing project, which we launched about a month and a half ago. 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, ”Finance Secretary Carlos Dominguez 3rd stressed in an interview.
He said the DoF has two alternatives for the plan: decrease government spending or increase revenue.
“But I’m telling you it’s going to be very difficult, this period of fiscal consolidation is going to be quite difficult. But the good thing that is going for us is that the interest rates are low. They haven’t gone up much. “, Dominguez continued.
“So we 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, not an absolutely good position, but a relatively good position.”
For his part, Deputy Finance Secretary Gil Beltran said: “So far I have seen that our estimates show that if we can get all these measures passed, we are now in 2021, by 2025, we will return to our usual deficit. “
According to him, the government’s budget deficit can return to its 2019 level, when the budget deficit represents only 3.55% of the whole economy. In 2020, the budget deficit fell to 7.6% of gross domestic product (GDP).
The debt-to-GDP ratio will also drop to around 60% and less from the current 60.4%.
Beltran said if the economy recovered quickly after the lockdowns were lifted, the government would be in a position to do even better in terms of fiscal performance.
“Because the factors of production are there, it’s just that they can’t move. Once you remove the blockades, checkpoints and restrictions, the economy will boom,” said the head of the DoF.
He added: “It could be sooner if the next administration is fast, if it’s as fast as this administration, then we can even do it in 2024.”
Beltran further said that by that time, the Philippine economy will have caught up with its neighbors and returned to its pre-pandemic growth rate and income levels.
“We expect to return to the 2016-2019 trend where we are not just au pairs, we were actually among the leaders of our peers. And as we have been emphasizing all the time, this pandemic has not destroyed the factors of production, he has just put it in quarantine. So, once it is released, we will grow at a very, very healthy rate, “Dominguez added.