The Ministry of Finance (DOF) has pledged a swift government return to fiscal consolidation after the massive spike in budget deficit and debt ratios due to the pandemic-induced recession.
At the launch of the 2022 Bureau of Internal Revenue (BIR) national tax campaign on Thursday, March 3, Secretary of Finance Carlos G. Dominguez III assured that the increase in the budget deficit and public debt ratios will not was only temporary.
Dominguez also said that despite the increase, the current budget deficit and debt-to-gross domestic product (GDP) ratios remained “manageable.”
In 2021, the government ended the year with a deficit-to-GDP ratio of 8.61%, up from 7.65% the previous year. Similarly, the debt-to-GDP ratio fell from 54.6% to 60.5%.
“Due to the unexpected costs of the pandemic and lower revenues generated by slowing economic activity, our fiscal deficit and debt-to-GDP ratios have temporarily increased,” Dominguez said.
“But they remain manageable and we are determined to quickly return to fiscal consolidation,” he added.
In particular, Dominguez announced that the DOF had already formulated a program to limit the budget deficit and improve the public debt-to-GDP ratio.
“This is part of our transition plan to the next administration. Improving our revenue collection to meet our spending needs this year will be key to our fiscal consolidation agenda,” the CFO said.
In addition, he said, the country’s economy, which has suffered its worst recession yet amid the pandemic, must begin to outgrow government debt by restoring strong growth and experiencing a rapid recovery. .
“This year will be critical,” Dominguez said. “We need to spend more on upgrading infrastructure. We need to invest more in our public health system and social services. We must continue to provide vaccines to our people. »
Meanwhile, Dominguez expressed confidence that the BIR and the country’s taxpayers “can deliver this year and in the periods to come to ensure that our economic resurgence is sustainable and truly inclusive for every Filipino.”
He cited BIR’s full shift to digitization even before the pandemic as a key factor in ensuring that the government continues to operate effectively and funds are available for additional emergency and health measures.
“Our improved revenue performance has allowed us to properly maintain fiscal discipline despite a larger spending program,” Dominguez said.
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