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Plan vs Reality: The President and Congress have lost their commitment to fiscal consolidation
['Benjamin E. Diokno']
BusinessWorld Online
It is important to note that there is no specific threshold for when a debt-to-GDP ratio becomes problematic.
For instance, one of the Euro convergence criteria is that the public debt-to-GDP ratio should be below 60%.
The global debt-to-GDP ratio is around 95%, while that of the US stands at over 120%, and Japan’s surpasses 250%.
Similarly, the 3% fiscal deficit benchmark, while not sacrosanct, has long been accepted as a norm by many academics and policymakers.
The President and Congress appear to have lost the earlier commitment to fiscal consolidation.