Prudent spending to continue – DoF

Finance Secretary Carlos Dominguez said the government plans to continue spending responsibly to prepare in case a second wave of coronavirus infections hits the country.

“Keep your powder dry. We don’t know how long this crisis is going to last so we have to have enough reserves for a second wave, for a third wave,” Dominguez said during a webinar hosted by

Bloomberg on Thursday. According to the finance chief, the Philippines is well-prepared for the coronavirus pandemic, given its strong fiscal position before the crisis.

He emphasized the country’s revenue effort, which reached 16.1 percent of gross domestic product (GDP) in 2019, was the highest in 22 years.

“Our debt-to-GDP entering this was 39.6 percent, the lowest it’s ever been at any particular time. So we have a lot of space here,” he added.

The government is boosting up its war chest against the COVID-19 pandemic. It has prepared a P1.74 trillion socioeconomic strategy to deal with the health crisis, which is equivalent to 9.1 percent of GDP.

Dominguez said most of its financing requirements are being supplemented by domestic commercial borrowings, as well as foreign loans. He said the Bangko Sentral ng Pilipinas (BSP) has also assisted in this aspect.

Meanwhile, Dominguez said the 50 basis point rate cut implemented the BSP was needed to bring back consumer confidence in the Philippines.

“Essentially, we’ve seen that we have to bring back confidence to our bankers. We have to bring back confidence to our consumers. Our economy is about 70 to 75 percent consumption driven so it’s of utmost importance that we bring back the confidence of our public in spending again,” he said.

The government’s economic managers are projecting the budget deficit to widen to 8.4 percent of GDP this year.

The Development Budget Coordination Committee (DBCC) also expects the economy to contract by two to 3.4 percent this 2020 due to the standstill caused by the pandemic.

“But we’re ready for a big bounce back next year,” Dominguez said.

For 2021, DBCC sees economic growth recovering at 7.1 to 8.1 percent.