Government borrowings hit P1.86 trillion in 7 months

MANILA, Philippines — The government borrowed from local and foreign sources P1.86 trillion from January to July, a level nearly equivalent to total borrowings for the past two years.

As the government borrows more in the near-term to fight COVID-19 and revive the economy from a pandemic-induced recession, President Duterte in 2022 will leave behind a record P13.7 trillion in debt, whose share to gross domestic product (GDP) by that time will be the highest in 17 years.

As of end-July, gross domestic borrowings mostly sourced from the sale of treasury bills and bonds amounted to P1.38 trillion, the latest Bureau of the Treasury data showed.

Gross external borrowings from program and project loans as well as offshore bond issuances reached P481.2 billion.

Total borrowings during the first seven months was nearing the combined 2018 and 2019 amounts of P1.91 trillion —P897.6 billion two years ago and P1.02 trillion last year.

In a presentation before the House appropriations committee Friday at the start of the hearings on the proposed P4.5-trillion 2021 national budget, Finance Secretary Carlos G. Dominguez III said gross borrowings would amount to more than P3 trillion this year, P3.03 trillion in 2021 and P2.32 trillion in 2022.

Dominguez said the bulk of borrowings will be sourced locally: 74 percent of total this year; 85 percent next year, and 80 percent in 2022 as the domestic financial system is awash in cash.

As 2021 budget documents had shown, these borrowings will jack up the Philippines’ outstanding debt to new highs of P10.16 trillion by yearend and P11.98 trillion next year.

As for the debt-to-GDP—the ratio reflecting the ability to pay obligations, Dominguez said these would rise to 53.9 percent by end-2020, 58.1 percent in 2021 and 59.9 percent in 2022.

This means that in 2022, the debt-to-GDP ratio will hit a 17-year high, the most elevated rate since 2005’s 65.7 percent.

These increases in debt-to-GDP in the next three years will offset the gradual decline during the past decade to a record-low of 39.6 percent in 2019.

At an estimated nominal GDP of P22.35 to 23.29 trillion in 2022, the amount of outstanding debt would be between P13.39 trillion and P13.95 trillion.

Asked by the Inquirer last Friday if these calculations were similar with the government’s projections, National Treasurer Rosalia V. de Leon replied that outstanding debt would be within that range, or about P13.7 trillion.

Dominguez nonetheless said the projected debt-to-GDP ratios in 2020 to 2022 were “still lower when compared to the country’s all-time high debt level of 71.6 percent of GDP in 2004.”

Dominguez said that as of Aug. 27, the Philippines, through the Department of Finance, already borrowed $8.83 billion from bilateral development partners, multilateral lenders as well as the offshore commercial market to finance the fight against the health and socioeconomic crises inflicted by the COVID-19 pandemic.

“Of the total amount, $5.98 billion is budget-support financing from the Asian Development Bank, the World Bank, the Asian Infrastructure Investment Bank, a development agency of France, and the Japan International Cooperation Agency. Meanwhile, we raised $2.35 billion from our latest global bond offering that fetched our lowest-ever coupon in the US dollar market. The remaining $496.36 million is composed of grant and loan financing from our development partners for various COVID-19-specific projects,” Dominguez said. INQ