The Department of Finance (DOF) vowed the government’s quick return to fiscal consolidation following the massive spike in budget deficit and debt ratios due to the pandemic-induced recession.
At the 2022 Bureau of the Internal Revenue (BIR) National Tax Campaign Kickoff on Thursday, March 3, Finance Secretary Carlos G. Dominguez III assured that the wider fiscal deficit and public debt ratios are only temporary.
Dominguez also said that despite the increase, the current budget deficit and debt to gross domestic product (GDP) ratios remained “manageable.”
In 2021, the government ended the year with a deficit-to-GDP ratio of 8.61 percent, higher compared with 7.65 percent in the previous year. Likewise, debt-to-GDP ratio has risen to 60.5 percent from 54.6 percent.
“Due to the unexpected costs of the pandemic and the lower revenue collections arising from the slowdown in economic activity, our budget deficit and debt to GDP ratios have temporarily increased,” Dominguez said.
“But they remain manageable and we are determined to return quickly to fiscal consolidation,” he added.
In particular, Dominguez announced that the DOF already formulated a program to limit the budget deficit and improve the government debt to GDP ratio.
"This is part of our transition plan to the next administration. Essential to our fiscal consolidation program is the improvement of our revenue collections to meet our expenditure requirements this year will be critical,” the finance chief said.
Moreover, he said the country’s economy, which saw its worst recession ever amid the pandemic, needs to begin outgrowing the government’s debt by restoring its high growth and meet quick recovery.
“This year will be critical,” Dominguez said. “We need to spend more on infrastructure modernization. We must invest more in our public health system and social services. We have to continue procuring vaccines for our people.”
Meanwhile, Dominguez expressed confidence that the BIR and the country’s taxpayers “can deliver this year and in the coming periods to ensure that our economic resurgence is sustainable and truly inclusive for every Filipino.”
He cited the BIR’s comprehensive shift to digitalization even before the pandemic as a key factor in ensuring that the government continued to function effectively, and that funds are available for the additional emergency and health measures.
“Our enhanced revenue performance enabled us to properly maintain fiscal discipline despite a larger spending program,” Dominguez said.