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Philippines to ensure fiscal prudence in infrastructure buildup to avoid "debt trap": finance chief

Xinhua, May 17, 2017 Adjust font size:

Philippine Finance Secretary Carlos Dominguez said Wednesday that the Duterte administration will have a tax reform to raise revenues for its massive infrastructure building plan and only 20 percent of its loans will be from overseas lenders to assure the public that 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 a lot more 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.

He pointed out that the government will take advantage of the excess liquidity in the domestic market by borrowing 80 percent from banks and other financial institutions here, while tapping only 20 percent of its loans from overseas lenders.

The Philippines announced officially the infrastructure building plan dubbed "Dutertenomics" last month, in which the government plans to spend 8.4 trillion pesos (169.58 billion U.S. 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.

"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. Endit