REYES, MICA ELLA S.

ABM 403
APPLIED ECONOMICS

Reaction paper

In his article in the Inquirer "PH debt now 63.5 percent of GDP," Ben de Vera examines
the current state of the Philippines' debt, which is now at 63.5 percent of its gross domestic
product (GDP). De Vera points out that this was the highest level ever recorded for the country
since 2005 according to the latest Bureau of the Treasury (BTr) data. De Vera also mentions
that despite the Omicron rise at the beginning of this year, the country’s GDP increased by a
better than anticipated 8.3 percent over the first quarter of the year. However, De Vera also
stated that even if the economy grows a lot in 2022, the debt of the country will still continue to
escalate and that this will put the country's investment-grade credit ratings at risk, while also
putting pressure on the incoming Marcos Administration.

After reading the article my reaction was that I felt dejected about our country’s current
economic situation. The high amount of debt in the country makes it impossible for our country
to prosper because even if the economy grows, it will be useless because the majority of the
revenue would be used to pay off the debt. This means that the incoming government will most
likely reduce the funds available for investment in infrastructure, education, and health care
which are important for building a productive economy for future generations. Furthermore, it
causes high-interest rates for people who want loans as well as inflation, which raises the cost
of goods and services and makes it more challenging for people to save money and make
investments. That is why I am worried about my future because if the national debt continues to
rise, it will place our generation in a tough position where we will have to pay more than we
earn.

In conclusion, In order to solve this problem, we need to make sure that our economy
recovers from its current state so that we can at least bring the debt-to-GDP ratio down to 40
percent which was the current ratio before the pandemic struck. And to do that, the government
should cut off unnecessary spending and increase taxes on corporations and high-income
earners.

References:

de Vera, B. O. (2022, May 13). PH debt now 63.5 percent of GDP. INQUIRER.Net.
https://business.inquirer.net/347708/ph-debt-now-63-5-percent-of-gdp

N. (2022, June 8). Philippines may need ten years to bring debt-to-GDP ratio down to
40%. BusinessWorld Online.
https://www.bworldonline.com/top-stories/2022/06/09/453718/philippines-may-need-ten-
years-to-bring-debt-to-gdp-ratio-down-to-40/