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DOF: P249-B per year budget cut to pay off PH debt? Say goodbye to 8,000km worth of roads

Money is tight
PHOTO: Department of Public Works and Highways

So it turns out a lot of you guys aren’t happy with the Department of Finance’s (DOF) proposal to raise taxes in order to deal with the country’s debt problems. Well, there is another option, but it’s one that’s arguably even harder to stomach than having to shell out extra for a pickup.

Basically, the agency is presenting three scenarios. The first is to borrow more money in order to cover the existing debt, which obviously is about as bad as band-aid as solutions come. Option two, as we discussed in a previous article, is to raise or impose more taxes.

And then there’s the third option: Budget cuts. The DOF isn’t too keen on going this route either, as it says the country’s economic recovery is also dependent on sustaining government spending on infrastructure, education, healthcare, and other sectors.

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What kind of budget cuts are we talking about? According to the DOF’s fiscal consolidation and resource mobilization plan for the incoming administration, the current government overshot debt projections from 2019 by a whopping P3.2 trillion over the past two years. This was in order to keep the country afloat during the worst of the COVID-19 pandemic and to sustain its Build Build Build Program. To avoid going nuclear and borrowing even more money to settle this, the DOF says the Philippines needs an additional P249 billion in revenue per year.


To help give the incoming administration an idea of what a P249 billion per year budget cut looks like, the DOF laid out some examples.

In terms of infrastructure, a P249 billion cut in spending is equivalent to 8,000km worth of paved roads or about 180,000km of temporary bridge upgrades. Yikes. Education? It’s about 140,000 public school classrooms. Health? More than 110,000 barangay health stations or 302 provincial hospitals.

Ultimately, the DOF says both borrowing more or cutting spending to settle the country’s debt aren’t advisable. The best option, according to the agency, is to raise taxes.

Hey, we told you it wasn’t going to be an easier pill to swallow. What route do you think our country should take here?

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PHOTO: Department of Public Works and Highways
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