The Department of Finance (DOF) estimated that the national government’s debt could have been P2.2 trillion more had President Duterte supported the revenue-eroding proposals in Congress at the height of the pandemic.
In a statement, Finance Chief Economist Gil S. Beltran said that total debt would have reached P15.4 trillion by the end of this year if the Duterte administration did not exercise fiscal discipline in responding to the over two-year Covid-19 crisis.
“As we have said over the past few years, the government has consistently exercised fiscal prudence in responding to the Covid-19 pandemic. We spent what we had to, but not more than what we could afford,” Beltran said on Monday, June 6.
“Had we acquiesced to pressure for us to spend more, our debt would have increased by P2.2 trillion more and reached P 15.4 trillion,” he added.
The government’s pandemic response strategically targeted the most vulnerable sectors, the DOF economist explained.
Financing for the two Bayanihan Laws focused on ensuring that the most essential health interventions and emergency economic relief measures for populations most adversely affected by the pandemic were funded fully.
He was referring to Republic Act (RA) No. 11469 or the Bayanihan to Heal as One Act and RA 11494 or the Bayanihan to Recover as One Act.
“Aware of the effects of additional spending on our borrowings, the DOF worked closely with legislators to limit the interventions under Bayanihan II to P140 billion, despite the objections of many other stakeholders,” Beltran said.
“The government did not support several stimulus bills, each proposing hundreds of billions of additional appropriations, precisely because we understood that this would translate into further increases in the deficit and debt,” he said.
According to Beltran, to deal with the effects of the pandemic in a strategic and cost-efficient manner, the DOF secured additional financing from multilateral partner-institutions to procure an adequate supply of vaccines for the target population.
“The accelerated vaccination program, along with shifting to the alert level system with granular lockdowns and increased public transport capacity, enabled us to aggressively reopen the economy and restore jobs,” he said.
Other fiscally sustainable economic recovery programs have also been enacted, including the Financial Institutions Strategic Transfer Act, and the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act.
According to a report by the DOF-Domestic Finance Group, the passage of proposed Covid-19 stimulus bills and other revenue-eroding measures would have led to additional spending or revenue losses of at least P2.2 trillion.
Examples of the revenue-eroding bills included in the calculation of the DOF-DFG were the proposed value-added tax (VAT) exemptions for oil, liquified petroleum gas (LPG), electricity and other commodities and abolition of other taxes.
Various Covid-19 stimulus bills and subsidies, the proposed exclusion of the 13th month pay, performance-based bonus and other income from taxable income, and appropriations for new departments or government entities proposed by various legislators.