World Bank economist suggests the Philippines starts on fiscal consolidation

A World Bank (WB) economist said the Philippine government will need to start a fiscal consolidation plan based on the right mix of expanded taxation and productive spending to manage debt racked up during the pandemic. WB Senior Economist Rong Qian said that from past experience of rapid debt accumulation, countries will need to use a combination of revenue and expenditure measures to reduce the debt-to-GDP ratio. Qian added that relying on growth alone will not be enough. Data from the Treasury showed that the Philippine government ramped up borrowings to finance its coronavirus pandemic response in the past two years. The government recorded PHP11.73tr (USD220bn) in outstanding debt as of end-2021, growing by 19.7% year on year. Qian added that the pace of fiscal consolidation needs to be studied.