PH debt hits new high of P10.41T

The national government’s debt stock climbed to a new record-high of P10.41 trillion as of February due to additional borrowings and a weaker peso.

In a report Monday, the Bureau of the Treasury said outstanding debt further increased from P10.33 trillion in January as both domestic and external obligations inched up month-on-month.

Compared to its year-ago level, the debt pile jumped 27.4 percent from P8.17 trillion in February last year.

The government has been ramping up borrowings since the onset of the pandemic to boost the country’s war chest against COVID-19 and to offset weaker revenue collections caused by the virus-induced recession.

To temper foreign exchange risks while taking advantage of healthy liquidity in the financial system, the government sourced the bulk of its borrowings locally. Unpaid domestic debt amounted to P7.36 trillion or 71 percent of the end-February total.

Domestic obligations rose by only 0.5 percent month-on-month but the year-on-year increase was a bigger 35.1 percent with the inclusion of the Bangko Sentral ng Pilipinas’ (BSP) P540-billion provisional advances extended to the national government in January included in the outstanding amount.

Besides the BSP’s zero-interest short-term loan, the volume of T-bills and bonds sold in February exceeded maturing debt paper, resulting in net availment of domestic financing, the Treasury added.

Foreign debt also inched up by 1.4 percent month-on-month and increased 12 percent year-on-year to P3.04 trillion during the period in review.

The Treasury attributed the month-on-month rise in external debt to an additional P14.53 billion in foreign loans plus the net effect of the peso’s depreciation against the US dollar that was worth P26.33 billion.

It noted the domestic currency weakened to 48.653:$1 at end-February from 48.076:$1 in January.

Total outstanding debt is expected to surpass P11 trillion by yearend.

For 2021, the programmed P3.03 trillion in gross borrowings—of which the bulk, or P2.58 trillion, would be borrowed from domestic sources—could further hike the debt-to-gross domestic product (GDP) ratio to a new high of 57 percent.

A measure of a country’s capability to pay its obligations, debt-to-GDP climbed to a 14-year high of 54.5 percent last year, reversing prepandemic gains that reduced the debt level to a record-low 39.6 percent in 2019.

But even with the expected peak in the debt ratio this year, economists believe credit rating agencies and multilateral lenders would only be worried if it breaches 60 percent.