Drilon: Next administration faces a 'perfect economic storm'
Senate Minority Leader Franklin Drilon on Wednesday said the next administration is bound to face a “perfect economic storm” with the ongoing record-high budget deficit and high prices of fuel products caused by the crisis between Russia and Ukraine as well as a ballooning debt.
“This is a perfect economic storm that we could face in the second half of this year. The next President must have the credibility, political will and competence to address the economic situations that we are confronted with. It is a very difficult situation,” Drilon said in an interview with CNN Philippines.
“Talagang mahirap ang kakaharapin natin (We will really face hardships) in the next six months insofar as the economy is concerned,” the veteran lawmaker said.
On top of a P12-trillion debt, the government has a budget deficit of P1.67-trillion in 2021. Aside from this, the next administration will have to deal with increases in petroleum price that will result in the increase in the prices of basic commodities.
The country’s outstanding debt, he noted, has already breached the ideal 60-percent debt-to-GDP ratio; the budget deficit in 2021 has reached 8.6 percent of the country’s GDP as tax collections suffered due to the Covid-19 pandemic.
“Whoever will take over the reins of leadership come June 30 should brace for the heavy impact of the oil crisis, the Covid-19 pandemic, high budget deficit, and ballooning debt,” Drilon said.
The Senate minority chief said he believe these situations are the reasons why state economic managers are rejecting proposals to suspend the excise taxes on fuel products. He also noticed that the suspension is not among the solutions presented by the economic managers.
He said state economic managers should “take the bull by the horns” even if it means a further setback on tax collections, warning of more adverse effects if the war between Russia and Ukraine will deteriorate.
“This is unusual. Nobody predicted this crisis. But we must face and confront this. There will be more adverse effects that will need solutions if the war escalates,” Drilon said.
“We should seriously consider suspension of the excise taxes on fuel products. The law clearly recognizes that if the price of oil per barrel exceeds 80USD, the government has the power to intervene to cushion its impact on the economy and the consumers,” he stressed.