By Kenneth Christiane L. Basilio, Reporter
LEGISLATORS need to pass a budget reform bill that will compel the government to spend responsibly in the face of a deteriorating national debt position, a Congressional think tank said.
In a report, the Congressional Policy and Budget Research Department (CPBRD) cited fiscal vulnerabilities that could worsen if the National Government fails to meet its revenue targets to keep up with increasing national budgets.
It said a Budget Modernization bill should enshrine fiscal responsibility via multi-year spending caps that would force the government to spend “within its means.”
“The NG (National Government) debt has been steadily rising in recent years,” it said in the report.
Debt hit a record P16.7 trillion at the end of March.
“Challenges associated with maintaining debt sustainability, and more generally, fiscal sustainability are compounding over time,” the CPBRD said.
“While the study does not suggest that the Philippines is facing an imminent sovereign debt crisis, it highlights the increasing complexities of managing debt sustainability,” it added.
The government must shift away from crisis-driven budgeting and pandemic-era spending patterns, it said.
Government resources were poured into health services during the pandemic, with economic revival efforts later focused on massive infrastructure spending.
“The elimination of public expenses that had been justified by the lockdowns, for example, will massively improve the fiscal situation,” the CPBRD said. “Pivoting away from the crisis budgeting and spending patterns is thus not only sensible given that the country is several years removed from the pandemic but also wholly viable.”
The think-tank noted that debt as a share of gross domestic product (GDP) has trended upwards due to stimulus-oriented spending, the think-tank said.
The Philippines’ debt as a share of GDP rose to 62% at the end of the first quarter, from 39.6% before the pandemic, according to the CPBRD.
“The most recent increases in the debt-to-GDP ratio can be attributed to the noticeably larger post-pandemic national budgets and their attendant budget deficits,” the CPBRD said.
The Philippines is seeking to bring the ratio down to 60.4% by end-2025, and to 56.9% by 2028.