NEDA chief says the country’s strong fiscal position enough to settle foreign loans
MANILA – Socioeconomic Planning Secretary-designate Karl Kendric Chua said against a backdrop of billions of dollars in loans from the Asian Development Bank and the World Bank, he remains optimistic the country’s economy is strong enough to settle its obligations.
Speaking at a press briefing hosted by Presidential Spokesperson Harry Roque, Secretary Chua said the country has a good credit rating of BBB+ despite the deficit it incurred and increased almost three times. He explained the deficit to GDP this year is programmed at 3.2%.
“We are okay with providing stimulus up to 9%, and that was announced already to the public and to the international community,” he explained. He added the credit rating remains very good which is a notch below the A rating.
As to the Debt-to-GDP ratio, the government has brought it down from a high of 80% in 2003 to 39% as of December 2019.
“And therefore, we have a very good fiscal position. And we have been very prudent in showing the international community that we can also provide funds to support our economic recovery. We did tax reform, three packages passed already and that is what is fueling confidence that we can actually pay our loans,” he added.
Secretary Chua added they in the executive department are using the borrowed funds for “productive activities whose returns are actually much higher than the interest rate that we are paying.”
“So, the answer to that is yes, we have a strong fiscal position to meet our obligations and still recover from the crisis,” he concluded.
The Asian Development Bank reported it has extended US$2.6 billion in loans to the Philippines this year while World Bank released some US$1.1 billion in loans this year. These loans have been earmarked for programs to fight the COVID-19 pandemic. (Melo M. Acuña)
Socioeconomic Planning Secretary-Designate Karl Kendric Chua. (Screen grab from Presidential Press Briefing/Melo M. Acuna)