MANILA, Philippines — Economic officials in the incoming administration of Ferdinand Marcos Jr. aim to reduce the country’s debt-to-GDP (gross domestic product) ratio to 3% by the end of the president-elect’s term in 2028.
New Finance Secretary Benjamin Diokno recently revealed this, saying such a goal is achievable under the current tax system that the Duterte administration will leave behind.
“For me, the tax system as it is now will give us the right level of income. I agree with the outgoing administration that we need what is called a fiscal consolidation plan. There should be a plan to reduce the deficit-to-GDP ratio, which currently sits around 7-8%,” he said in an interview on One News’ The Chiefs on Thursday evening.
“The goal is that by the end of President Marcos’ term, the debt-to-GDP ratio will be around 3%. That’s where we were before the crisis and it was doable given the current tax system, sa tingin ko lang,” Diokno added.
The current finance ministry had proposed new, higher taxes as well as a three-year deferral of planned income tax cuts for individual taxpayers to pay off the country’s debts.
READ: Higher taxes to pay off Duterte’s COVID-19 debts
But Diokno said earlier he was not in favor of raising taxes even as the new Marcos administration stands to inherit a huge pile of debt.
He nevertheless said that the new economic managers will always consider the outgoing administration’s suggestion and “find out what is doable and what is not.”
In order to reach a debt-to-GDP ratio of 3%, the country’s economy would need to grow 7% this year and 6% for the next six years, according to Diokno.
“So ganun ang plano namin then we will accomplish our plan, which was originally adopted na, we will reach the upper middle income country ang Pilipinas within maybe a year or two and another goal that has been disrupted because of the pandemic, that we are going to get an A grade,” he said, pointing out that the country is currently rated B to B+.
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