Philippines to borrow more to cover COVID-19 response

July 9, 2020 - 12:08 PM
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woman undergoes rapid test for coronavirus as part of stringent health protocols imposed on persons going home to their provinces, during a send-off program at the Quirino Grandstand in Manila on Sunday ; July 5, 2020. (PNA/Avito Dalan)

MANILA — The Philippine government expects the country’s debt-to-GDP ratio to rise to 50% from 39% last year, its finance secretary said on Wednesday, as it increases borrowing to mitigate the economic impact of the new coronavirus pandemic.

With revenues in the first half down 16% from last year as virus curbs shuttered businesses, Finance Secretary Carlos Dominguez said the government is looking to borrow more to finance the budget and programs to help revive the economy.

“We are planning to borrow up to 50% of GDP, up from 39% at the end of 2019,” Finance Secretary Carlos Dominguez told an economic forum. “We have the capacity to borrow…and we have the capacity to pay these loans in the future,” Dominguez said.

The government is seeking a record 4.3 trillion pesos ($86.83 billion) budget for 2021 focused on reviving an economy that is expected to shrink for the first time in two decades this year and for containing the spread of the coronavirus.

“Our economy has slowed down during the COVID crisis. We have not been able to collect taxes as we had planned, and we have been spending a lot of money on our COVID response,” Dominguez said.

The Southeast Asian country, which used to enjoy one of the world’s fastest growth rates before the pandemic, is projected to suffer a 2% to 3.4% decline in gross domestic product this year, before returning to growth in 2021. ($1 = 49.5200 Philippine pesos) —Reporting by Karen Lema Editing by Ed Davies