Press Releases

On debt payments

April 19th, 2021

Actually, We have significant fiscal protection from a credit rating downgrade, and the decline in interest payments is further proof of this downside buffer. In fact, the average interest rate on national government (NG) debt declined from 4.67% in 2019 to 3.88% in 2020. In other words, despite an increase in debt burden, we are actually paying lower interest peso-on-peso.

I think that augurs well for the prospect of more government intervention in lifeline and stimulus measures. Bayanihan 3 is likelier to pass given our fiscal standing. As I mentioned earlier in a conference of international businessmen, while the Philippine debt flow or deficit is big, its debt stock is still small relative to our own historical performance.

Moving forward, we must continue to affirm our commitment to fiscal and economic reforms, and to government support for economic recovery. This will send a strong signal to the capital markets that we are committed to doing what it takes to get through this crisis. Of course, with confidence in the capital markets, we will continue to be able to access debt at lower interest rates.

Lower debt payments also make room for higher lifeline interventions. If we’re not paying too much to our creditors, we can feed our people better.

Finally, we should do everything that we can to expedite vaccination. By July, I expect that the United States will begin producing surplus vaccines for the rest of the world. This will be a big positive for our efforts to get more vaccines, especially given our historic ties.

As I would often repeat, all government interventions at this point are a bridge to the vaccine. The aim is ultimately not to eradicate COVID-19, but to build immunity strong enough that nobody dies or gets severely hospitalized for it, much like the common flu. Only then can we return to the old normal.

In the meantime, I welcome good news on our government finances, because it means that we can afford more interventions to support and protect our people.

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