Government borrowings to finance COVID-19 response have driven debts through the roof, pushing total to a new high of P8.6 trillion in April alone.
At least two-thirds of the debts were from domestic sources, some P5.9 trillion as of April. It was up by nearly 1 percent month-on-month and 12.6 percent year-on-year, according to data from the Bureau of Treasury released on Tuesday (June 2).
In a statement, the Treasury said it adjusted the domestic debt figure in March to add the P300 billion that the Bangko Sentral ng Pilipinas (BSP) released under a bond repurchase agreement.
The Treasury said in April, a total of P50.82 billion worth of government securities had been issued while peso appreciation cut only P170 million from the value of dollar bonds issued the same month.
At end-April, the peso strengthened to 50.444 to a dollar from 50.78 to a dollar last March.
At the end of the first four months of 2020, foreign debt was P2.7 trillion, up nearly 3 percent month-on-month and 6 percent year-on-year.
In April alone, the Treasury said foreign loans amounted to P87.34 billion just to raise funds for COVID-19 response.
Value of foreign loans, however, fell by P15.1 billion when the peso strengthened.
In April, the Cabinet-level Development Budget Coordination Committee (DBCC) projected this year’s outstanding debt to hit a record-high P9.589 trillion or 49.8 percent of gross domestic product—a debt-to-GDP ratio poised to be the highest in 10 years.
While the Philippines had managed to gradually reduce its debt-to-GDP ratio, the government will ramp up borrowings to fund COVID-19 response.
Debt-to-GDP ratio was 39.6 percent in 2019, the lowest since 1986.
Last week, the Philippines secured a combined $1.25 billion in loans—$750 million from China-led Asian Infrastructure Investment Bank (AIIB) and $500 million from the Washington-based World Bank.
The Inquirer had learned that the AIIB and the World Bank will co-finance another COVID-19-related loan, this time for health infrastructure.
On top of last week’s two new loans, the Philippines as of mid-May already borrowed $4.85 billion from multilateral lenders—$1.7 billion through two loans from ADB and $800 million from World Bank. This was on top of $2.35 billion in dollar-denominated bonds sold abroad last April.
Edited by TSB