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BUSINESSMAN Rey E. Calooy said the Philippines now has P10.3 Trillion in foreign and domestic debts. This will be paid by the present generation and beyond, including still unborn Filipinos.

Calooy, president of the Filipino-Cebuano Business Club, said that in most cases of world banking, those who have approved loans are people with money.

To be specific, Calooy said that the Philippines’ debt based on Gross Domestic Product (GDP) ratio is 54 percent. If this is a pizza pie and you slice it, the 54 percent is debt while the remaining 46 percent is the only thing left, so that if the creditors want full payment, we cannot pay right away.

Calooy said the fiscal policy management is being handled by the administration, while the monetary policy management is the mandate of Bangko Sentral ng Pilipinas (BSP).

He said that when former President Gloria Macapagal Arroyo left Malacañang in 2010, the foreign and domestic debt totaled 49 percent. But when the term of former President Benigno “Noynoy” Aquino III ended in 2016, the foreign and domestic debt was reduced to only 39 percent. So, if that was a pizza pie and you sliced it, 39 percent was debt and the 61 percent was owned by Filipinos.

“During the time of Noynoy Aquino, we paid our debt more and borrowed less. So, the value of peso strengthened. The price of diesel fuel at that time was P20 per liter. The peso was strong against the dollar resulting to lesser needs of money to import goods,” Calooy said.

“When Noynoy Aquino was able to reduce the foreign and domestic debt from 49 to 39 percent, even if he did not increase taxes like excise tax on fuel, cigarettes and alcohol, the Philippine government did not borrow much. Now, the administration of President Rodrigo Duterte strictly imposed big taxes on fuel (diesel and gasoline) which resulted to skyrocketing of prices which immediately added burden to the entire Filipino citizenry,” Calooy said.

Of the 54 percent foreign and domestic debt, 39 percent were borrowed by several past administrations of former Presidents Ferdinand E. Marcos, Corazon C. Aquino, Fidel V. Ramos, Joseph E. Estrada, Arroyo and Noynoy, while the 15 percent was acquired by Duterte, with less transparency on how he used it.

In borrowings, the creditors will become richer. The borrowers will become poorer. It is a fact that there are borrowers who fail to pay, and there are borrowers who are good in handling debts.

He said that the Philippines is an emerging economy. In our present situation, we are on the second investment grade. The investment grade which started in the previous administration means if you have good investment grade, the administration is good in handling the fiscal policy management.

The international credit rating agency like Standard and Poor, JP Morgan, among others, will give you good credit rating if you are good in handling fiscal management.

However, the Moodest, one of the credit rating agencies, signaled that the Philippines is in a “Worrying State.” They are worried of the ballooning debts of the Duterte administration. The debts went high, but the Covid-19 pandemic also went high.

“It is just like saying. We lend you huge sum of money in response to Covid-19 but there is no effect. So, credit-rating agencies in the world are worried if the Philippines can pay back its debts,” Calooy said.

In effect, the next Filipino generations will pay bigger taxes. Our debts will be paid, not by the politicians who caused these big debts but by the next generations and the still unborn Filipinos, Calooy added.

He believed that today’s leaders who obtained skyrocketing debts will be already dead 20 years from now and those who are born today, and tomorrow will be 20 years old from now and will be joining the working force of the business sector and will be the ones who will pay these foreign and domestic debts.