FINANCE Secretary Ralph G. Recto said a prospective Supreme Court (SC) order to return funds taken from the Philippine Health Insurance Corp. (PhilHealth) and Philippine Deposit Insurance Corp. (PDIC) will be complied with in the next budget cycle.
“Assuming that the decision is made in the middle of the budget (preparation process), then that will increase the deficit,” Mr. Recto said at a House Committee on Appropriations briefing on Monday.
“If we are to comply, we will do it in the succeeding year’s budget,” he added.
Akbayan Party-list Rep. Jose Manuel I. Diokno had queried him on the possibility of an adverse Supreme Court ruling. Mr. Diokno had participated in the legal challenge to the government’s decision to raid PhilHealth’s reserves.
Bayan Muna had asked the Supreme Court to order the return of P60 billion to PhilHealth and P104 billion to the PDIC.
The deficit remains manageable at 5.7% of gross domestic product (GDP) in the first half, Mr. Recto said, with a target to bring down the ratio to 5.5% this year.
The deficit-to-GDP ratio is expected to fall to 5.3% next year and to 4.3% in 2028.
“It may affect our credit ratings (also),” he said.
In April, Fitch Ratings reaffirmed the Philippines’ BBB credit rating with a stable outlook.
The Department of Finance (DoF) said government-owned or -controlled corporations (GOCCs) remitted P105 billion to the Bureau of the Treasury as of July.
At the same briefing, Mr. Recto said the government is open to cutting taxes if the deficit falls to 3% of GDP.
“My advice is that when the deficit gets down to 3%, then we can start talking about cutting taxes,” he said.
Asked if he is open to lowering the value-added tax (VAT) to 10% from 12%, Mr. Recto said: “For as long as the deficit is roughly 3% and the debt-to-GDP maybe below 50%, I would not object to lower taxes.”
At the end of June, sovereign debt hit a record P17.27 trillion, up 11.5% from a year earlier. This brought the debt to GDP ratio to 63.1% at the end of June, the highest ratio since 2005.
The debt-to-GDP ratio is expected to end the year at 61.3%, picking up to 61.8% by the end of 2026 and then falling to 58% by 2030. — Aubrey Rose A. Inosante