“Primarily, our [borrowing] program is very manageable because it is very conservative. We only fund what is required,” he told members of the House Committee on Appropriations during the hearing for the proposed 2022 national budget Thursday.

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The government has programmed to borrow P3.07 trillion this year and around P2.47 trillion in 2022.

Dominguez said while financing requirements increased because of the virus-induced pandemic, the government is “fortunate enough” to easily access funds at low cost because the economy kept its investment-grade credit rating.

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“It has not been downgraded and that allows us to access (the) credit market at a relatively low interest rate,” he said.

Dominguez said the interest rate on borrowings by the government to date is 100 basis points lower than in the previous administration at 4.2 percent annually.

The Duterte administration borrowed around P2.7 trillion in 2020, of which bulk 70 percent of was sourced onshore.

The increased borrowings brought the share of the budget gap to gross domestic product to 7.6 percent last year, nearly doubled from the previous year.

“Nevertheless, this level is still sustainable considering that we had to rapidly enlarge our health care capacity and procure sufficient doses of vaccines for our people,” Dominguez said.

He said governments around the world registered higher borrowings since last year because of the pandemic but what sets the Philippines apart “is that we entered 2020 with a historic low debt-to-GDP ratio of 39.6 percent.”

“This means that we could better absorb additional borrowings than other countries whose debt ratios were already at 60 percent before the pandemic,” he said, referring to the international threshold of debt-to-GDP. via (PNA)

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