10 OST LIKELY ECONOMIC PROBLEMS IN THE PHILIPPINES

1. Inflation has reached 8%, a 14-year high

Philippine Statistics Authority (PSA) reported that November inflation was 8%, a 14-year high. This is indeed
high, but taking the average for 2022, we have a 5.6% inflation rate so far, lower than Thailand and Singapore
which experienced deflation in 2020, slight inflation in 2021, and now are at 6%

RESOLUTION
Addressing high inflation requires a whole-of-government approach, including fiscal consolidation trough
budget rationalization, increased tax revenues, and fiscal restraint to minimize job losses.

First, government deficits and debts must be lowered. Rationalizing the government budget will not only cut
unnecessary spending but also reduce the budget deficit. PPP (public-private partnerships) may also be
helpful in funding infrastructure projects to avoid incurring more foreign debts.

Moreover, revenue efforts must be increased through tax policy and administration reforms. Increasing the
excise tax on non-essential goods will serve as both a revenue and a health measure, and imposing corporate
income tax or a digital service tax on non-resident foreign tech giants will generate more collections from the
digital economy.

Fiscal consolidation aimed at taxes and spending that help the rich can help reduce inflation. There could be
trade-offs in terms of jobs to a slower economy but inflation is already hurting the poor and vulnerable. Thus,
keeping targeted subsidy will help ease their hardships while the government continues to address high
inflation.

2. Public debt has reached P14 trillion

The nation's total debt has reached a significant P14 trillion as of May 2023, with an average interest rate of
around 5% as disclosed by the National Treasurer prompted by Pimentel's probing. According to economic
managers, the country's debt is equivalent to 61% of its gross domestic product or GDP.

3.