Philippine Finance Secretary Carlos Dominguez said on Wednesday that the Duterte administration will reform the tax system and borrow only 20 percent of its loans for a massive new infrastructure program from overseas lenders, to ensure there will be no "debt trap."
Dominguez said in a statement that the government will exercise fiscal prudence and responsibility to ensure that its unmatched public investments in infrastructure would create jobs and business opportunities, which, in turn, would sustain the country's growth momentum and accelerate poverty reduction.
He noted that the Department of Finance is bent on having a Comprehensive Tax Reform Program approved in the Congress so that it could help raise enough revenues to bankroll the plan.
Carlos Dominguez speaks during a news conference on the sidelines of the 50th Asian Development Bank (ADB) Annual Meeting in Yokohama, Japan on May 5, 2017. /VCG Photo
He said the government will take advantage of excess liquidity in the domestic market by borrowing 80 percent from domestic banks and financial institutions, while tapping only 20 percent of its loans from overseas lenders.
The Philippines officially announced the infrastructure building plan dubbed "Dutertenomics" last month. The government plans to spend 8.4 trillion pesos (169.58 billion US dollars) over the next five years to close the country's infrastructure gap that has for decades blunted its global competitiveness as an investment destination.
There are concerns and warnings from local media and analysts that the government might fall into a "debt trap" in implementing its program as the government is actively seeking investment from abroad.
Workers are seen on scaffolding at a construction site for an expressway in Manila. /VCG Photo
"The government will only resort to financing its ambitious infrastructure buildup through borrowings – and mostly from local sources – if the economy can grow to finance its debts," Dominguez said in response.
He explained that this economic strategy will not only strengthen the country's poor infrastructure backbone, but also create more jobs, which means more people paying taxes.
(Source: Xinhua)
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