₧3-T borrowing plan cut? ‘Let’s see’

THE government may opt to borrow less than the P3-trillion program it set this year amid the Covid-19 pandemic should the collection of state revenues continue to improve for the rest of the year, Finance Secretary Carlos G. Dominguez III said. This, after the government’s two main revenue-collection agencies—bureau of Internal Revenue (BIR) and Bureau of Customs (Boc)—surpassed by 7.17 percent the P1.527-trillion adjusted combined target set by the Cabinet-level Development Budget Coordination Committee (DBCC). However, Dominguez was quick to point out that combined revenues collected by BIR and BOC are still down 12 percent year-on-year as businesses were affected by the pandemic. For January to August, the government collected P1.637 trillion, lower than P1.864 trillion in the same period last year. “We are still short than what we would like ideally, but then again, revenue agencies have shown that they are still very active and that they are taking their job very seriously and have, in fact, exceeded the revised targets. But again I want to emphasize we are still about 12 percent below last year, so our borrowing program will be informed by these new developments and if these new developments are of course positive and we may not need to borrow as much as we did; but again, we are waiting to see how the rest of the year goes by,” Dominguez told Finance reporters in a news conference on Tuesday following the signing of the ¥50-billion loan agreement with Japan International Cooperation Agency for the second phase of the Post-disaster Standby Loan (PDSL). Because revenues are down due to the pandemic, the government needed to borrow more to finance its spending requirements and cover its budget deficit. From an initial P1.4-trillion borrowing program, the government ramped up its borrowing program to P3 trillion this year and another P3 trillion next year. The bulk of the borrowings will be sourced locally. As of end-july this year, government’s gross borrowings have already doubled to P1.86 trillion from only P839.75 billion in the same period in 2019. The Department of Finance has so far secured over $9.4 billion or roughly P455 billion in loans and grants from foreign lenders to beef up the government’s war chest against the Covid-19 pandemic. The DBCC also expects the country’s debt-togdp ratio this year to increase to 53.91 percent of GDP—A level it has not seen in over a decade— from a record low of 39.6 percent of GDP last year. By the end of this year, the national government expects its outstanding debt to reach P10.16 trillion, up by 31.42 percent from last year’s amount. As tax collections are down amid the pandemic, the DBCC projects the country’s budget deficit to more than double to 9.6 percent of GDP or P1.815 trillion from only 3.4 percent of GDP or P660.2 billion last year.