National government debt rose slightly in March to P8.18 trillion, or twice the national budget in 2020, as an increase in domestic borrowing that month offset payments made on foreign loans.
It was just a 0.1 increase, though, from P8.17 trillion in February but 5.8 percent higher than P7.8 trillion in 2019, according to new data from the Bureau of Treasury released on Thursday (May 1).
Local debt, accounting for two-thirds of total, rose 1.2 percent month-on-month and 6.1 percent year-on-year to P5.51 trillion in March.
The Treasury said domestic debt rose after P63.07 billion in government securities were issued.
The Treasury’s T-bill and T-bond auctions were met with strong demand in early March, but met lukewarm response as bid rates rose amid economic uncertainties when the government imposed a lockdown against COVID-19.
Foreign debt declined by 1.9 percent to P2.66 trillion in March from P2.72 trillion in February.
This was the result of P44.18 billion in payments made and P7.02 billion in gains by a stronger peso.
The peso strengthened to 50.78 against the US dollar in March from 50.897 per US dollar in February.
On a yearly basis, though, foreign debt grew by 2.3 percent from P2.61 trillion in March 2019.
The Treasury also said that since the Philippine Statistics Authority (PSA) used 2018 as gross domestic product base year from 2000 previously, nominal GDP rose 4.9 percent in 2019. The 2019 debt-to-GDP ratio was lowered to 39.6 percent from 41.5 percent under base year 2000.
As the Philippines ramped up borrowings to finance COVID-19 response, National Treasurer Rosalia V. de Leon on Friday said that the 2020 debt-to-GDP ratio using base year 2018 will rise to 44.95 percent.
This was comparable to the earlier projection of the Cabinet-level Development Budget Coordination Committee (DBCC) of 46.7 percent using the year 2000 as base.
Finance Secretary Carlos G. Dominguez III had said that such a higher debt-to-GDP ratio was still “low” compared with Philippines’ neighbors.
Under the Duterte administration’s P1.49-trillion four-pillar socioeconomic strategy against COVID-19, the government planned to borrow an additional P310 billion from foreign lenders to augment funds.
De Leon had said that as the Philippines increasingly tapped loans from multilateral lenders like the World Bank, Asian Development Bank and the Beijing-based Asian Infrastructure Investment Bank, the actual share of foreign borrowing could be higher than 25 percent of total, the level programmed for 2020.
Under the 2020 national budget and prior to the COVID-19 pandemic, borrowings were poised to hit a record P1.4 trillion, with 75 percent coming from local investors in the form of treasury bills and bonds.
But De Leon had said that the share of domestic borrowings in this year’s total would decline to 70-72 percent even as “we see market players now participating as liquidity got additional infusion” from further cuts in banks’ reserve requirement ratio, or the amount of cash they need to keep intact.