아세안

The short note analyzes the capacity of the Philippine financial market to meet the government's fiscal needs amidst efforts to reduce the fiscal deficit. The fiscal deficit increased significantly due to social spending and COVID-19 support, rising from an average of 2 percent of GDP (2011-2019) to 7.8 percent (2020-2022), with national debt reaching 60.9 percent of GDP in 2022. The government aims to reduce the deficit to 3 percent by 2028 through the Medium-Term Fiscal Framework (MTFF). However, high financing needs, mostly sourced from the domestic market, could crowd out private investment. Despite ample liquidity in the financial market, it is decreasing, posing a risk of reduced funds for private sector lending. The World Bank recommends continuing fiscal consolidation, enhancing market liquidity, and developing alternative financing options to mitigate these risks and support economic growth.