PH debt tally reaches new high of P11.61 trillion in July

MANILA, Philippines—A mix of more domestic and foreign borrowings plus a weaker peso further jacked up national government debt to a new high of P11.61 trillion last July.

The latest Bureau of the Treasury data released on Tuesday (Aug. 31) showed end-July outstanding debt rose 4 percent from P11.17 trillion in June. The debt level jumped by a faster 26.7 percent from P9.16 trillion in 2020.

The bulk, or 69.9 percent, of these outstanding obligations were sourced locally. Domestic debt increased 2.3 percent month-on-month and 29.8 percent year-on-year to P8.12 trillion.

In a statement, the Treasury attributed the bigger domestic debt to net issuance of government securities, referring to the larger volumes of treasury bills and bonds issued in recent months “owing to heightened financing requirements.”

The prolonged pandemic required more money to fill the COVID-19 war chest, which the government mainly sourced from the local debt market amid still flushing liquidity. Domestic borrowings also minimized foreign exchange risks.

Foreign debt also rose 8.2 percent month-on-month and 27.3 percent year-on-year to P3.49 trillion.

The Treasury said a net of P159.34 billion in external borrowings came in last July. These foreign loans included the P146.17 billion raised from selling US dollar-denominated global bonds.

The peso’s depreciation added P100.66 billion to the debt pile, as the domestic currency weakened to 50.223 against the US dollar in end-July from 48.704:$1 last June.

The government had programmed gross borrowings of P3.07 trillion this year, of which P2.49 trillion will be raised locally.

As a result, outstanding debt was expected to hit a record P11.73 trillion by the end of 2021.

The debt-to-gross domestic product (GDP) ratio, which reflected a country’s capability to repay its obligations, had been projected to climb to a 16-year high of 59.1 percent by end-2021.

At the end of the first half of 2021, debt-to-GDP reached 60.4 percent — higher than the 60-percent threshold which debt watchers considered as a manageable public debt level for emerging markets.

The government ramped up borrowings while the 3.95-percent average gross domestic product (GDP) growth during the first six months fell below expectations after Metro Manila reverted to the strictest lockdown levels due to a surge in COVID-19 cases last April.

TSB