Dominguez rejects Imee Marcos's debt payment moratorium
Published Apr 14, 2020 12:00 am
By Chino Leyco
Finance Secretary Carlos G. Dominguez III has said he rejects Senator Imee Marcos's suggestion that the national government stop paying its debt obligations during the coronavirus disease (COVID-19) pandemic.
Calling the suggestion “narrow-sighted,” Dominguez warned that the Philippines will lose the “integral” part of its “remarkable turnaround story” since 1986, or the year when former President Ferdinand Marcos was exiled from the country.
Finance Secretary Carlos G. Dominguez III
(MANILA BULLETIN FILE PHOTO) “The strongest pillar of the Philippines’ standing in the global economic community is that the country honors its financial obligations–and, for that reason, investor confidence in our economy is broad and deep,” Dominguez said in a statement. “Integral to our country’s remarkable turnaround story is how credible and responsible a borrower it has become since 1986.” The finance chief noted that the national government’s debt ratio was significantly reduced from as high as 78.3 percent at the end of the Marcos administration in 1986, to 65.2 percent by 1991 and 44.2 in 2019. “We have built a 34-year track record, beginning with the Cory Aquino administration, of honoring our country’s obligations. Honoring our word has allowed us to remain as one of the most attractive investment destinations and one of the world’s favorite bond issuers,” he said. “Rather than take an option that will tank our long-term investment and borrowing prospects, we should burnish our reputation as a borrower and a business partner with integrity and "palabra de honor" (word of honor) because this ultimately benefits the Filipino people.” Excluding guarantees, the actual debt-to-gross domestic product (GDP) ratio of the national government stood at 41.5 percent as of last year. “In the developing world, we are among the few countries able to borrow from multilateral institutions at largely concessional rates,” Dominguez pointed out. He also said the senator’s suggestion will affect ordinary Filipinos, including pensioners and small depositors. “Around two-thirds of our debts are local creditors. Senior citizen pensioners, for instance, rely on their investments in government debt instruments for their income,” the finance official said. For this reason, Dominguez emphasized that the Philippines “has not and will not consider a moratorium on the national government’s debt obligations despite the 2019 coronavirus (COVID-19) pandemic.” "Debt moratorium has not crossed our mind. It was never entertained or will ever be a part of our crisis response measures," Dominguez said. He explained that the country “cannot wish away our obligations at this critical time when the reliability of our word secures our economy's capacity to bounce back once the COVID-19 pandemic is over.” “More favorable options are available for financing our emergency and recovery programs. If we lose our credibility among international lenders, we will lose our ability to access low-interest, concessional financing for our recovery and stimulus programs,” he added. Despite the crisis, Dominguez reiterated that the country’s fundamentals are strong, “and the willingness of investors and creditors to partner with the Philippines means we can negotiate new loans from a position of strength.”
Finance Secretary Carlos G. Dominguez III(MANILA BULLETIN FILE PHOTO) “The strongest pillar of the Philippines’ standing in the global economic community is that the country honors its financial obligations–and, for that reason, investor confidence in our economy is broad and deep,” Dominguez said in a statement. “Integral to our country’s remarkable turnaround story is how credible and responsible a borrower it has become since 1986.” The finance chief noted that the national government’s debt ratio was significantly reduced from as high as 78.3 percent at the end of the Marcos administration in 1986, to 65.2 percent by 1991 and 44.2 in 2019. “We have built a 34-year track record, beginning with the Cory Aquino administration, of honoring our country’s obligations. Honoring our word has allowed us to remain as one of the most attractive investment destinations and one of the world’s favorite bond issuers,” he said. “Rather than take an option that will tank our long-term investment and borrowing prospects, we should burnish our reputation as a borrower and a business partner with integrity and "palabra de honor" (word of honor) because this ultimately benefits the Filipino people.” Excluding guarantees, the actual debt-to-gross domestic product (GDP) ratio of the national government stood at 41.5 percent as of last year. “In the developing world, we are among the few countries able to borrow from multilateral institutions at largely concessional rates,” Dominguez pointed out. He also said the senator’s suggestion will affect ordinary Filipinos, including pensioners and small depositors. “Around two-thirds of our debts are local creditors. Senior citizen pensioners, for instance, rely on their investments in government debt instruments for their income,” the finance official said. For this reason, Dominguez emphasized that the Philippines “has not and will not consider a moratorium on the national government’s debt obligations despite the 2019 coronavirus (COVID-19) pandemic.” "Debt moratorium has not crossed our mind. It was never entertained or will ever be a part of our crisis response measures," Dominguez said. He explained that the country “cannot wish away our obligations at this critical time when the reliability of our word secures our economy's capacity to bounce back once the COVID-19 pandemic is over.” “More favorable options are available for financing our emergency and recovery programs. If we lose our credibility among international lenders, we will lose our ability to access low-interest, concessional financing for our recovery and stimulus programs,” he added. Despite the crisis, Dominguez reiterated that the country’s fundamentals are strong, “and the willingness of investors and creditors to partner with the Philippines means we can negotiate new loans from a position of strength.”