Higher domestic and foreign borrowings in July further increased the national government’s outstanding debt to a new record high of P7.04 trillion at the end of the first seven months.
The latest Bureau of the Treasury data released Friday showed that the total outstanding obligations as of end-July inched up 0.4 percent from P7.02 trillion a month ago and by 10.3 percent from P6.38 trillion a year ago.
In a statement, the Treasury attributed the higher end-July debt stock to “net availments on both domestic and foreign obligations.”
Locally sourced debt, which comprised the bulk or 65.32 percent of the outstanding debt, rose 0.5 percent month-on-month and 11 percent year-on-year to P4.6 trillion as of July.
“The [month-on-month] increase in the level of domestic debt was due to the net issuance of government securities amounting to P21.57 billion, slightly tempered by the stronger peso that diminished the value of onshore dollar bonds by P120 million,” the Treasury explained.
The peso closed in July at 53.16:$1, from 53.404 at end-June, the Treasury noted.
The end-July foreign debt, meanwhile, rose 0.2 percent month-on-month and 9.1 percent year-on-year to P2.443 trillion.
The Treasury said the additional external debt came on the back of P20.68 billion in net availment of foreign loans last July.
The month-on-month rise in foreign obligations was nonetheless “offset by currency fluctuations on both dollar and third-currency denominated debt amounting to P11.14 billion and P3.6 billion, respectively,” the Treasury said.
During the Tax Management Association of the Philippines’ general membership meeting last Thursday, Budget Secretary Benjamin E. Diokno reiterated that the absolute value of debt should not be a worry as the right metric was the share of debt to the gross domestic product.
“If your debt-to-GDP ratio is 60 percent or lower, you’re in good shape. Japan’s ratio is 250 percent; ours is 40 percent and declining,” Diokno told tax managers.
“The economy’s debt-to-GDP ratio, the correct metric in analyzing debt sustainability better than the absolute level of public debt, is low at 42 percent in 2017 and is projected to decline to 39 percent by 2022,” Diokno said in a statement last Wednesday.