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Debt is top priority for Diokno as new Philippine finance chief

·1-min read
Benjamin Diokno. (Photographer: Geric Cruz/Bloomberg)
Benjamin Diokno. (Photographer: Geric Cruz/Bloomberg)

By Ditas Lopez and Siegfrid Alegado

Benjamin Diokno, the Philippines’ next finance secretary and current central bank governor, said his priority next month when he takes on the new role is ensuring the government meets its debt obligations.

“Maybe the first item in the agenda will be the sustainability of our public debt,” Diokno said in a briefing Thursday after his appointment was announced. This will assure credit-ratings agencies that the government is “serious about consolidating our fiscal resources, so that we’re able to reduce our debt- and deficit-to-GDP ratio over time,” he said.

President-elect Ferdinand Marcos Jr. and his team face a deficit swollen by pandemic-era support programs and financing needs for planned infrastructure investments. Outgoing finance officials have warned against financing debt with additional borrowings.

The government’s debt-to-GDP ratio, which is currently above the 60% typically considered acceptable, isn’t a cause for concern, Diokno said. The economy can grow the 6% to 7% that’s needed to pare debt, he said.

Diokno, who served as budget secretary under two presidents before moving to the central bank in 2019, said he will also look at a fiscal consolidation proposal that includes taxes on products from digital services to single-use plastic bags. Marcos previously said he’s against new taxes.

Philippines watchers will likely see Diokno’s appointment as positive given his wealth of fiscal experience, Shreya Sodhani, economist at Barclays Bank Plc, wrote in a note. “This is especially true given that little in terms of details is known about the new president’s plans for the economy, with fiscal consolidation being supported by the outgoing finance department.”

© 2022 Bloomberg L.P.

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