GENERAL GOVERNMENT (GG) debt will likely be the equivalent of 46.7% of gross domestic product (GDP) by the end of 2020, the highest level in 14 years, as the government borrows more to fund its pandemic containment measures, the Treasury said.

National Treasurer Rosalia V. de Leon told a Senate budget briefing Thursday that the projection compares with the 2019 level of 34.1% of GDP.

If realized, this debt level would be the highest since the 49.3% posted in 2006, according to Finance department data.

“In 2020, our GG debt as a percentage of GDP (will be) about 46.7% and we will be in the middle of the pack against other ASEAN countries,” she said, citing estimates for Thailand at 49.5% of GDP and Malaysia at 65.5%.

Pandemic borrowing has reversed the declining trend of GG debt-to-GDP starting in 2017.

Fitch Ratings had forecast a debt-to-GDP ratio of 47.8% this year, 49.8% in 2021 and 50.1% in 2022.

The GG debt stock was P6.65 trillion last year. Of the total, 62% or P4.11 trillion was provided by domestic creditors.

GG debt is the outstanding debt of the national government, social security institutions and local governments less the intra-sector debt holding of government securities and the bond sinking fund.

Ms. De Leon said despite the increasing debt stock, much of the budget still goes to productive spending since interest payments as a share of revenue and expenditure remain low.

“Even our interest payments were not eating up a lot of our expenditure nor of our revenue. In the 70s, it was about 30% of our revenue and even our expenditure. But now, it’s just about 12% at most so we’re saying we can still channel a lot of our revenue and a share of our expenditure to productive spending like infrastructure and social services,” Ms. De Leon said.

She said interest payments are expected to account for 19% of revenue, and 11.9% of expenditure in 2021.

She said the debt stock will taper off once the government returns to fiscal consolidation and returns to a fiscal deficit of about 3% of GDP.

The outstanding debt stock hit P9.16 trillion at the end of July, two-thirds of it domestically sourced.

The government plans to borrow P3 trillion this year to plug its budget deficit, which is projected to hit 9.6% of GDP. — Beatrice M. Laforga