GOVERNMENT debt is projected to breach the P8-trillion mark next year, the Department of Budget and Management (DBM) said.

DBM estimated that outstanding debt in 2020 will total P8.768 trillion, up 11.64% from the estimated level at the end of 2019. At the end of 2018, debt was P7.118 trillion.

The bulk of the 2020 outstanding debt will be owed to domestic creditors, equivalent to P5.773 trillion, while P2.995 trillion will be sourced from overseas.

The government is planning to borrow an additional P1.845 trillion and make principal payments of P1.135 trillion to finish this year with P7.854 trillion in debt.

This will be offset by the principal payments to be made next year amounting to P1.014 trillion.

Finance Undersecretary Gil S. Beltran, the department’s chief economist, said the ratio of debt to gross domestic product (GDP) remains “very low” and that the economic team remains “very careful” in tracking borrowing.

“Right now, (debt ratio is at) 41.9%, Magiging (it will be) 39%, so it’s going down. No worries about debt because we are very careful. Even with a 3.2% (of GDP) deficit to 2022, 39% pa rin ’yung debt ratio (the debt ratio will remain at 39%),” Mr. Beltran told the reporters last week.

According to the Development Budget Coordinating Committee’s fiscal program, the government’s debt-to-GDP ratio target is 41.4% this year and next year, and 38.6% by 2022.

The Bureau of the Treasury said outstanding government debt was P7.804 trillion at the end of July, up 10.8% year on year.

It fell 0.8% against the P7.869 trillion posted in the first half due to the appreciation of the peso and payments made on domestic debt.

Of the outstanding debt, 67.3% or P5.251 trillion was owed to domestic creditors while 32.7% was provided by foreign creditors.

This year, the DBCC has targeted a borrowing mix of 73:23 in favor of domestic sources, while maintaining a 75:25 ratio for next year up to 2022.

Favoring domestic borrowing will decrease the government exposure to foreign exchange volatility and risks.

Walang problema sa (There is no problem with (debt because we are financing very good projects. If you borrow and use the proceeds to have a feast, you should start worrying,” Mr. Beltran added. — Beatrice M. Laforga