Gov't to limit debt as new taxes hang

With outstanding debt at a record high, the government may have to go slow with its borrowing spree, at least for now, amid its no new taxes stance and the still elevated interest rate environment.

- LOUISE MAUREEN SIMEON

Economists told The STAR that the Marcos administration will likely limit debt in the short term given the lack of potential sources of excess revenues after Finance Secretary Ralph Recto said he is not inclined to impose new taxes.

The country’s outstanding obligation settled at a record P14.62 trillion as of end-2023, taking a heavy hit from high-interest rates. For 2024, debt is expected to balloon to P15.84 trillion.

Leonardo Lanzona, economist and professor at the Ateneo de Manila University, said the government should have prioritized debt reduction especially coming from the pandemic when massive borrowings were incurred.

“As debt increases from an already huge amount, the probability of defaulting on these loans creates risks, which is a turnoff for investors,” Lanzona said.

“The government may likely limit its debt from now on. Unless it can increase tax revenues, there is little chance of getting loans especially because of BSP’s (Bangko Sentral ng Pilipinas) interest rate policy,” he said.