President Duterte’s chief economic manager bucked the legislative proposals seeking to set a statutory debt limit and create the government’s committee in charge of fiscal discipline.
During the House ways and means committee hearing on Monday, Sept.6, Finance Secretary Carlos G. Dominguez III said the pending proposals involving the country’s debt management strategy will only bring inflexibility to the government.
On the debt ceiling for instance, Dominguez explained that the government should always maintain certain flexibility when it comes to deficit spending particularly for relief measures during a crisis.
Congress also has the power of the purse, having the final say on the annual budget and spending of the national government, Dominguez added.
“The Congress already has the power when it looks at the budget, and to determine the cap. Essentially, the determination of the debt cap is the determination of how much we spend,” the finance chief said.
“It is already in your hands. I don't think at this point in time, there is a need to put a debt cap and make the country very inflexible,” he added.
Dominguez cited the case of Indonesia that by law, has an annual budget deficit cap of three percent of the economy, or gross domestic product (GDP).
“Indonesia has put a deficit law and the moment the pandemic struck, they threw it out. So what's the point of having one if when you really are going to breach it, you just throw away the law,” he noted.
Under House Bill No. 4538, Congress is looking at setting a limit on the total indebtedness of the national government to not more than 50 percent of GDP. Currently, the country’s debt ratio was at 60.4 percent.
Likewise, proposal for the creation of a public debt management office failed to secure the support of the Department of Finance (DOF), as Dominguez explained that there is already established procedures among agencies for such function.
“Quite frankly, at present we have all the procedures already and the different sets of institution to look at our debt, we’re including the Monetary Board which is independent,” Dominguez said.
Moreover, the finance chief said the inter-agency Development Budget Coordination Committee as well as the National Economic and Development Authority - Investment Coordination Committee also examine all debt plans.
“The procedures are not only in the Department of Finance, it is also in the Office of the President, because every time we have to incur debt, we have to get a special powers from them,” he added.
There are now two bills pending in Congress that aim to create a new Cabinet-level agency that will be in charge of the government’s debt management system and the establishment of a Congressional Oversight Committee on debt.
"I think we have sufficient oversight already at this point in time,” Dominguez said.