PH debt-to-GDP ratio eased to 62.1% in end-June

The share of the Philippines’ public debt to the economy eased to 62.1 percent as of end-June from 63.5 percent at the end of the first quarter, the highest since 2005, the Bureau of Treasury (BTr) data showed.

The government reported on Tuesday that the economy grew by 7.4 percent in the second quarter, below market expectations. However, the better-than-expected 8.2-percent growth in the first quarter brought first-half expansion to an average of 7.8 percent, above the 6.5-7.5 percent full-year target.

The national government’s outstanding debt stood at P12.79 trillion in June, up 14.6 percent from P11.17 trillion a year ago. However, earlier BTr data had shown that the national government’s borrowings were nearly halved to P1.07 trillion during the first half, amid a recovering economy which yielded more tax and non-tax revenues. That meant, financing assistance from the Bangko Sentral ng Pilipinas (BSP), which the government tapped at the onset of the COVID-19 pandemic, was no longer needed.

This year’s borrowings were programmed to reach P2.2 trillion which will further raise  the national government’s outstanding debt to a new high of P13.4 trillion in end-2022, with a 17-year-high annual debt-to-GDP of 61.8 percent.

The Marcos administration’s more ambitious 6.5-8 percent yearly GDP growth goal was expected to gradually lower the public debt ratio to 52.5 percent by 2028.

Pre-pandemic, the Philippines’ debt-to-GDP fell to a record-low 39.6 percent in 2019, but massive borrowings to finance cash assistance to vulnerable households and the purchases of COVID-19 shots for the free mass vaccination program bloated the debt pile.

Meanwhile, the BTr on Tuesday raised P35 billion from reissued 10-year bonds at a lower rate, and opened its tap facility window to sell another P10 billion to government securities eligible dealers (GSEDs)-market makers at an annual average rate of 5.791 percent.

National Treasurer Rosalia de Leon noted that the bonds with remaining life of six years and five months before maturity fetched a yield below secondary market levels. In a statement, the BTr also noted that the awarded rate was lower than the original 6.875-percent coupon when these IOUs were first sold in 2019.

Domestic creditors offered to lend the BTr up to P105.7 billion or thrice larger than the amount it wanted to borrow. To date, the government borrowed P260 billion through this bond series.