Debt climbs to new high of P11.2T

THE NATIONAL Government’s outstanding debt inched up to a new high of P11.166 trillion at the end of June, amid an increase in foreign borrowings to finance the pandemic response.

Preliminary data from the Bureau of the Treasury (BTr) showed the National Government’s debt stock rose by 0.9% from its end-May total of P11.07 trillion. This is also 23% higher than the P9.054-trillion outstanding debt a year ago.

Since the start of the year, the debt pile grew by 14% from P9.795 trillion, as the state borrowed P1.371 trillion.

Of the total, local debt accounted for 71%, while 29% were external borrowings.

As of end-June, outstanding local borrowings reached P7.938 trillion, a tad higher than the P7.916 trillion logged in May after the BTr increased its borrowing program for the month.

Overall government securities grew by 0.3% to P7.398 trillion from the previous month, but 25.6% higher from a year ago.

The local debt stock included a P540-billion loan from the Bangko Sentral ng Pilipinas (BSP).

External debt, on the other hand, jumped 2.3% to P3.23 trillion from the previous month.

“The increase in external debt was due to the impact of local-currency depreciation against the US dollar amounting to P64.86 billion and net availment of foreign loans amounting to P25.52 billion. These were tempered by the P18.27-billion decrease in the peso value of debt denominated in other currencies such as the EUR (euro) and JPY (Japanese yen) due to currency appreciation,” the BTr said.

Foreign debt rose by 12.7% from P2.864 trillion a year ago. This was broken down into P1.42 trillion in foreign loans and P1.81 trillion in global bonds.

The debt stock rose further as the government has to plug its widening budget deficit as the pandemic continued, Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael L. Ricafort said.

“Increased government spending especially on infrastructure to help pump-prime the economy as a major pillar of the economic recovery program also led to wider budget deficits and some pick up in outstanding government debt recently,” he added.

Meanwhile, overall guaranteed debt rose month on month by 2.8% to P438.6 billion as of end-June, but 4.7% lower than the P460 billion as of June 2020.

The BTr attributed the increase to the P11.07-billion freshly acquired guarantees and the P3.98-billion impact of local-currency depreciation, which were partly offset by third-currency exchange rate fluctuations and debt repayments.

Mr. Ricafort said the government’s debt pile will continue to increase in the coming months as public spending rises, especially on infrastructure and ahead of the May 2022 national elections.

“The budget deficit-to-GDP (gross domestic product) and debt-to-GDP ratios of the Philippines have been relatively lower compared to some countries in ASEAN/Asia amid fiscal discipline in view of limited government funds allowed under the law for any additional stimulus measures.”

The government planned to raise P3 trillion this year from domestic and external lenders to help fund its budget deficit seen to hit 9.3% of GDP.

The country’s debt level is expected to reach 59.1% of GDP by year’s end, from 54.6% as of end-2020 and 39.6% as of-end 2019. — Beatrice M. Laforga