President Rodrigo Duterte has sufficient fiscal space to borrow and spend more in combating the coronavirus. But is he making full use of this? Read this in-depth story by RalfRivas.
I think if there was ever a time to borrow for the next generation, now is a good time to do thatThe funds were sourced from loans and bond sales, borrowings from the BSP, 2019 and 2020 budgets, as well as savings from the fiscal plans.
Economists from the University of the Philippines, who include Paloyo, earlier proposed that Duterte spend at least P1 trillion to address the health crisis and the economic impact.IBON Foundation The country’s debt relative to the size of the economy, reflected by the debt-to-gross domestic product is at 41.5% as of end-2019, the lowest in recent history.
Ateneo de Manila School of Government dean Ronald Mendoza echoed Paloyo, adding that low debt-to-GDP and high reserve cover suggest that the country has sufficient fiscal space “to mount a countercyclical response to the present global pandemic and economic slowdown.” For instance, the BSP aggressively lowering interest rates this year encourages businesses to borrow for capital. Moreover, the additional liquidity as a result of the lowering of the reserve requirement ratio or the amount banks need to hold in their reserves injects some P200 billion in the financial system.
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