PH debt to breach P10 trillion in 2020, nearly P12 trillion in 2021

MANILA, Philippines — As the government borrows more to respond to the health and socioeconomic crises inflicted by the COVID-19 pandemic, its outstanding debt will balloon to breach the P10-trillion mark by yearend.

Documents from the proposed P4.5-trillion 2021 national budget showed that the national government’s outstanding debt will increase to P10.16 trillion by end-2020 from P7.73 trillion in 2019.

Gross domestic borrowings — mainly from the sale of treasury bills and bonds — this year will amount to P2.22 trillion, while gross external borrowings will reach P785.6 billion — set to become the biggest-ever foreign borrowings for a single year.

For 2020, the Bureau of the Treasury will issue a net of P48 billion in short-dated T-bills, with a gross of P480 billion to be floated while P432-billion worth will also mature within the year.

The Treasury will also sell P1.67 trillion in fixed-rate T-bonds, on top of a programmed P500 billion in short-term borrowings from the Bangko Sentral ng Pilipinas (BSP) through the repo facility and advances.

National Treasurer Rosalia V. de Leon on Wednesday said they can avail of up to P540 billion in repo but the Treasury was “still assessing if needed.”

As for foreign borrowings, the government will secure P466.8 billion in program loans and P29.1 billion in project loans, as well as sell offshore P289.7 billion in bonds.

So far this year, the Philippines already sold P186.1 billion in global bonds — P118.7 billion in dollar-denominated securities and P67.3 billion in euro bonds.

De Leon said they were “monitoring markets” for possible offshore issuances of yuan-denominated panda and yen-denominated samurai bonds.

As such, total gross borrowings this year will hit over P3 trillion.

In 2021, the government will borrow another P3.03 trillion — a gross of P2.58 trillion from domestic sources on top of P442.4 billion from multilateral and bilateral lenders as well as foreign commercial borrowings.

Short-term borrowing from the BSP was programmed at P1 trillion next year.

The additional debt next year will further jack up the outstanding amount to a new high of P11.98 trillion by end-2021.

Based on earlier Development Budget Coordination Committee projections, the jump in borrowings during the next two years will pull the debt-to-gross domestic product (GDP) — the ratio reflecting the ability to settle obligations — up to 53.9 percent by yearend and 58.3 percent in 2021 from 39.6 percent in 2019.

The last time the Philippines had a debt-to-GDP above 50 percent was 50.2 percent in 2010.

If attained, the projected debt-to-GDP ratios in 2020 and 2021 would be the highest since the 58.8 percent recorded in 2006.

Finance Secretary Carlos G. Dominguez III earlier said the bulk or three-fourths of yearly borrowings will be sourced locally, as the domestic financial system remained awash in cash while minimizing foreign exchange risks.

As of June, the national government’s outstanding debt stood at a record-high P9.05 trillion.

JPV