Gov’t debt stock hit P 11.6T in July

The combination of additional domestic and foreign borrowings plus a weak peso further jacked up the national government’s debt stock to a new high of P11.61 trillion in July.

The latest Bureau of the Treasury data released on Tuesday 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 a year ago.

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 the 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 entailed more money to beef up 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 included the P146.17 billion raised from selling dollar-denominated global bonds.

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

The government had programmed to borrow a total of P3.07 trillion this year, of which P2.49 trillion will be raised locally.

As such, outstanding debt was expected to hit a record P11.73 trillion by year-end.

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 as the government ramped up borrowings.

The 3.95-percent average gross domestic product GDP growth in the first six months fell below expectations after Metro Manila reverted to the strictest lockdown levels due to a surge in COVID-19 cases in April. INQ