Socioeconomic Planning Secretary-designate Karl Kendrick Chua on Thursday said that despite hefty loans from the Asian Development Bank and the World Bank, he was optimistic the country’s economy was strong enough to settle its obligations.
Speaking at a press briefing hosted by Palace spokesman Harry Roque, Chua said the country has a good credit rating of BBB+ despite a higher budget deficit.
The deficit-to-GDP ratio was programmed at 3.2 percent this year, but the government was seeking to raise it to 9 percent to boost the economy that had suffered from the pandemic.
“We are okay with providing stimulus up to 9%, and that was announced already to the public and to the international community,” he explained.
Chua, the director general of the National Economic and Development Authority (NEDA), noted that the government had brought down the debt-to-GDP ratio from a high of 80 percent in 2003 to 39 percent as of December 2019.
“And therefore, we have a very good fiscal position. And we have been very prudent in showing the international community that we can also provide funds to support our economic recovery. We did tax reform, three packages passed already and that is what is fueling confidence that we can actually pay our loans,” he added.
Chua said the executive department planned to use borrowed funds for “productive activities whose returns are actually much higher than the interest rate that we are paying.”
The Asian Development Bank has extended $2.6 billion in loans to the Philippines while the World Bank has released $1.1 billion. These loans have been earmarked for programs to fight the Covid-19 pandemic. Melo M. Acuña