PHL to honor its financial obligations despite COVID-19 crisis

The strongest pillar of the Philippines’ standing in the global economic community is that the country honors its financial obligations–and, for that reason, investor confidence in our economy is broad and deep.

On April 14, Department of Finance Secretary Carlos Dominguez III said in a statement that the Philippines has not and will not consider a moratorium on the national government’s debt obligations despite the 2019 coronavirus (COVID-19) pandemic. 

“Debt moratorium has not crossed our mind. It was never entertained or will ever be a part of our crisis response measures,” Secretary Dominguez said.

Dominguez made the statement following Senator Imee Marcos’ suggestion that the government should consider suspending its debt interest payments and use the P451-billion allocation as additional cash aid for Filipino families affected by the COVID-19 crisis.

“For this reason, a moratorium was never considered or entertained as a tool to address COVID-19. The country’s fundamentals are strong, and the willingness of investors and creditors to partner with the Philippines means we can negotiate new loans from a position of strength," he added.

Dominguez said the figure that Senator Marcos cited includes debt servicing for loans from domestic creditors, including pensioners and small depositors. Around two-thirds of the country’s debts are from local creditors. Senior citizen pensioners, for instance, rely on the investments in government debt instruments for their income.

“The strongest pillar of the Philippines’ standing in the global economic community is that the country honors its financial obligations–and, for that reason, investor confidence in our economy is broad and deep. Integral to our country’s remarkable turnaround story is how credible and responsible a borrower it has become since 1986.  Back then, our total debt-to-GDP (Gross Domestic Product) ratio hit as high as 78.3 percent. By 1991, this ratio had gone down to 65.2 percent.”

Finance chief said the Philippines has been working with multilateral institutions such as the Asian Development Bank (ADB), the World Bank, and the Asian Infrastructure Investment Bank (AIIB) for the additional $5.6-billion (around P280-billion) financing for its 4-pillar strategy against COVID-19.

The Duterte administration’s 4-pillar socioeconomic strategy against COVID-19 are (1) Emergency Support for vulnerable groups, (2) Resources to fight COVID-19, (3) Fiscal and monetary actions, and (4) An economic recovery plan.

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