CPBRD warns of risks to long-term fiscal stability

MANILA, Philippines — The government’s current debt and rising interest payments are taking up a significant portion of public resources, with the state think tank warning that any further deficit spending could worsen the situation and put at risk long-term fiscal sustainability.

In its latest discussion paper, the Congressional Policy and Budget Research Department (CPBRD) cautioned that multiple risks could threaten the generally positive outlook in the near and medium–term.

“Slower-than-expected economic growth due to inflation-induced demand contractions, supply side disruptions, or global economic headwinds may weaken revenue performance and push the debt-to-gross domestic product (GDP) ratio higher,” the report read.

Cabinet-level Development Budget Coordination Committee lowered this year’s GDP growth target to a range of 5.5 to 6.5 percent from the original target of six to eight percent.

Despite the global economic strains,  Finance Assistant Secretary Neil Adrian Cabiles said the country is experiencing slower-than-expected growth, but remained confident the economy is on track with its fiscal targets.

CPBRD said maintaining a balanced short-term debt share is crucial for preserving fiscal flexibility and reducing the government’s exposure to external shocks that could destabilize the economy.

According to its report, short-term debt share increased by one percent in 2024 from 0.6 percent in 2023.