Outstanding debt tops P9-T in June

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THE National Government’s (NG) outstanding debt breached the P9-trillion mark as of end-June, on increased government borrowings to finance the coronavirus response.

In its latest report released on Wednesday, the Bureau of the Treasury (BTr) said outstanding debt climbed 1.8% to P9.054 trillion, from the P8.89 trillion logged as of end-May. This was also 15.1% bigger than P7.869 trillion recorded as of June 2019.

The NG debt portfolio rose by P1.32 billion or 17.1% from P7.73 trillion as of end-December 2019.

Around two-thirds of the debt sourced domestically, while 32% came from external sources.

Outstanding domestic debt increased by 2.6% month on month to P6.19 trillion as of end-June on the back of higher issuance of local government securities. Local debt papers issued jumped 2.7% to P5.89 trillion from the month prior and 11.2% year on year.

Total foreign debt reached P2.864 trillion, up 0.3% from the month prior and 11% higher from a year ago.

“For June, net availment of external loans amounted to P48.81 billion which was offset by the P41.5 billion mainly due to local currency appreciation,” the Treasury said. The peso hit P49.79 against the greenback last month from P50.585-a-dollar level seen in the period ending May.

Despite the rising debt stock, World Bank Country Director for Brunei, Malaysia, the Philippines and Thailand Ndiame Diop said the country was still able to maintain “prudent fiscal management” which would allow it to boost its fiscal response to the pandemic.

“We are looking at the Philippines and comparing to other countries in the region and looking at the initial condition, what is the economic condition when the pandemic hit.… I think the prudent fiscal management of the past few years has really positioned the country to be among the countries that are really at the forefront in terms of capacity to respond on the fiscal side,” Mr. Diop was quoted as saying in a statement released Wednesday by the Finance department.

Debt-to-gross domestic product (GDP) ratio hit a low of 39.6% in 2019.

The Development Budget Coordination Council (DBCC) projected outstanding debt to balloon to a record P9.589 trillion or 49.8% of GDP by end-2020.

As revenues slide amid the pandemic, the government is planning to borrow more to plug the budget deficit that may reach 8-9% of GDP. — Beatrice M. Laforga