On government debt, WESM prices, and the UP presidency

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* BusinessWorld Nov. 21, 2022.
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Today and tomorrow I am attending the Pilipinas Conference 2022, organized by Stratbase ADR Institute, held at the Ayala Museum in Makati City. I thank Stratbase president, friend, and fellow BusinessWorld columnist Dindo Manhit, for the invitation. Among the Keynote Speakers of the two-day conference are Department of Budget and Management (DBM) Secretary Amenah Pangandaman on Nov. 21, and Finance Secretary Benjamin Diokno on Nov. 22.

This morning, Secretary Pangandaman spoke about “Open Government and Digitization Efforts of the DBM.” Among the things she said are: building a CSO (certified security officer) desk in the DBM to directly link the public to the agency, a P12.47-billion budget for ICT (information and communications technology) and digitalization programs and projects in 2023 for the digital transformation of the government’s procurement process, and diminish human discretion in government transactions.

These are good initiatives by Secretary Pangandaman to help reduce waste and inefficiencies in government transactions and procurement. When waste is minimized, the need for taxes to sustain wasteful spending is also minimized. People should use their additional income and savings for corporate expansion and household needs, for more job creation, not for funding more waste in government.

Tomorrow, Secretary Diokno will talk about “Strengthening Public-Private Partnerships (PPPs) to Rebuild the Philippine Economy” — a timely topic because the Philippine government’s debt keeps rising and we need more hard infrastructure to hasten mobility of people and commodities, goods and services, without compromising more tax resources.

HIGH PUBLIC DEBT

In 2019, the government had a budget deficit of P660 billion. This ballooned to P1.67 trillion in 2021, and may likely reach P1.4 trillion by end-2022. Interest payment alone was P429 billion in 2021 and this is likely to reach P530 billion this year.

The outstanding public debt (actual plus guaranteed) has increased from P8.22 trillion in 2019 to P12.15 trillion in 2021 and this is likely to reach P14.5 trillion by end-2022. Our (actual) public debt already slowed to 37% of GDP in 2019, jumped to 57% in 2021, and is projected to reach 59% of GDP this year (see Table 1).

Stagflation (stagnant growth plus high inflation) is already building up in many rich countries this year and a global recession is likely to happen next year. We should have wide leeway in both public and private resources to sustain important services without resorting to more borrowings and imposing new taxes on companies and people who are just recovering their revenues and income this year to 2019 level....

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