The issuance of US dollar-denominated global bonds in May, which raised budget support to fight COVID-19, jacked up the national government’s borrowings to P1.51 trillion at the end of the first five months.
The latest Bureau of the Treasury data showed that combined gross domestic and external borrowings from January to May climbed by 92 percent from P787.1 billion during the same five-month period last year.The end-May total borrowings already exceeded the original program of P1.4 trillion for the entire year.
The Treasury was still firming up the updated 2020 financing program due to the need to borrow more debt amid weak revenues caused by a COVID-19-induced recession while the government had to jack up spending to address the health and socioeconomic crises caused by the pandemic.End-May domestic borrowings reached P1.15 trillion, up from P576 billion a year ago.External borrowings also increased to P356.6 billion from P211.1 billion last year.
During the month of May alone, the additional financing from local and foreign sources amounted to P289.8 billion, which included P572 million in project loans, P118.7 billion in global bonds, P75.5 billion in net treasury bills and P95 billion in fixed-rate treasury bonds.
The Philippines raised $2.35 billion from its offshore bond sale, which fetched record low coupons across two tenors.
In May, the Cabinet-level Development Budget Coordination Committee projected the debt-to-gross domestic product (GDP) ratio to reach 49.8 percent by year’s end, equivalent to a record P9.6 trillion in outstanding debt, before further rising to 51.5 percent in 2021 and 52.3 percent in 2022.
The last time the Philippines had a debt-to-GDP ratio above 50 percent was in 2010 at 50.2 percent.
Prior to the pandemic, the Philippines’ debt-to-GDP ratio, which reflects a country’s ability to pay its obligations, fell to 39.6 percent in 2019, the lowest since 1986.
Last week, Finance Secretary Carlos Dominguez III reiterated that the Philippines had “the capacity to borrow—we are borrowing at very low rates, and we have the capacity to pay these loans in the future.”
“The repayment will come from our taxes in the future. And our taxes will come from healthier Filipinos working from returned economic growth starting next year. So the debt is very manageable and it is affordable for us,” Dominguez said. —Ben O. de Vera INQ