The Philippines’ debt standing grew at almost the same pace as its economy in 2019, leading to an improved debt-to-gross domestic product (GDP) ratio of 41.5 percent.
In a report on Wednesday (Jan. 29), the Bureau of the Treasury said 2019’s actual debt-to-GDP ratio was lower than both the year’s target of 41.7 percent and 2018’s record of 41.9 percent.
The Treasury said this was the “result of prudent cash and debt management backed by steady economic growth.”
Total debt, foreign and domestic, as of end-2019 amounted to P7.73 trillion, up by 0.3 percent from P7.71 trillion and 6 percent higher than P7.29 trillion in 2018.
The year-on-year increase in the national government’s outstanding debt nearly matched the eight-year low 5.9-percent GDP growth posted
in 2019.
On an annual basis, the end-2019 outstanding debt of the national government was the biggest ever. But on a monthly basis, the highest thus far was August 2019’s P7.94 trillion.
Domestic debt, accounting for two-thirds of total, rose 0.2 percent month-on-month and 7.3 percent year-on-year to P5.12 trillion.
The Treasury attributed the month-on-month increase in domestic debt to “net issuance of government securities amounting to P11.96 billion
and the P20-million effect of peso depreciation on onshore dollar bonds.”
In December, the Treasury sold P4.96 billion in “premyo” bonds to small investors, while the peso weakened to 50.802 against the US dollar.
Amid flushing domestic liquidity, the government preferred to borrow locally for minimal foreign exchange risks.
Foreign debt increased 0.4 percent month-on-month and 3.5 percent year-on-year to P2.6 trillion.
For 2020, the Cabinet-level Development Budget Coordination Committee (DBCC) had set the borrowing program at a record P1.4 trillion.
This could increase the national government debt to a record P8.8 trillion by the end of 2020.
At least 75 percent, or P1.05 trillion, of domestic borrowings would be in the form of treasury bills and bonds.
This week, the Treasury started to sell retail treasury bonds at a coupon of 4.375 percent.
The government will also borrow from foreign sources through debt papers.
In January, the government sold 1.2 billion euros in bonds at record low rates.
Despite the planned borrowings, the government expected the debt-to-GDP ratio to further slide to 41.4 percent in 2020.
The government wants to bring down debt-to-GDP share to 38.6 percent by 2022.