PH debt stock seen staying high over near term

Amenah Pangandaman Photo by Ryan Leagogo/ INQUIRER.net

MANILA  -The Philippine government’s debt stock as reckoned against the value of the domestic economy will recede slowly in the next three years as the country has not yet fully emerged from the devastating impact of the pandemic on production and consumption activities, according to Budget Secretary Amenah Pangandaman.

Pangandaman said in a press briefing on Monday that the Philippine economy is also expected to grow more slowly this year compared to 2022, along with the trajectory of the global economy.

The budget chief was reacting to statements made by House Deputy Speaker Ralph Recto, who said over the weekend that the proposed P5.767-trillion national budget for 2024 would prompt the government to borrow an average of about P4 billion every day.

“The debt level will not be going down in the near term,” Pangandaman said, meaning that the stock of government financial obligations would continue to represent about 60 percent of Philippine gross domestic product.

Data at the Bureau of the Treasury show that the debt-to-GDP ratio has climbed up steadily from 39.6 percent in 2019 before the pandemic to 60.9 percent in 2022.

READ: PH debt stock hits fresh record high of P14.15T in June

READ: Lower debt-to-GDP ratio eyed even as gov’t loans top P14T

With the need to respond to pandemics, the government was prompted to borrow heavily, bringing the debt ratio to 54.6 percent of GDP in 2020 and further to 60.4 percent in 2021.

As of the end of March, this ratio was pegged at 61 percent, with the debt stock reaching P13.857 trillion.

Still, Pangandaman said the Marcos administration’s medium-term fiscal framework sets a goal of reducing the debt stock to 51 percent of GDP by 2028.

“The debt level will not be going down until 2025 and that is because our revenue measures (or proposed new policies) are not yet kicking in,” she said.

“Also, our economy is not yet fully (re-)opened, and growth will possibly slow down because the growth of the global economy is expected to be slower,” she added.

READ: IMF: Philippine economy to grow 6% in 2023, 5.5% to 6% in 2024

In a related development, First Metro and UA&P said in their latest monthly report issued on Monday that national government borrowings “won’t count much” in the second half of 2023.

They attributed this outlook to an expectation that the Philippine government will fall short of its 2023 budget deficit of P1.5 trillion.

“Besides, it (national government) has increased its cash position by P892 billion by end-May and its needs for (the second semester) would rise only at a normal pace,” they added. INQ