Significant increase in PH gov’t borrowings seen in 2024 — S&P

MANILA  —The Philippine government is expected to incur larger borrowings this year, even as the country’s fiscal deficit is projected to narrow in the years to come, as the state looks for cash to pay old debts and fund its spending plans.

In a commentary sent to journalists on Wednesday, S&P Global Ratings said the Philippine government is projected to sell $40 billion (P2.3 trillion) in new, long-term commercial debts this year, bigger than the estimated $29.8 billion (P1.7 trillion) it issued in 2023.

Including short-term borrowings, the credit rating agency said the state’s total commercial debt stock would increase to $253.2 billion (P14.24 trillion) by the end of 2024, from the estimated $223.2 billion (P13 trillion) in 2023.

READ: Gov’t gross borrowings up 28.2% in Nov.

”Most other sovereigns will increase borrowing this year,” S&P said. “Thailand and the Philippines are also likely to see significant increases in borrowings.”

Debt-to-GDP ratio

”Other major Asia-Pacific governments are also likely to borrow more in 2024. As a share of GDP (gross domestic product), however, we project their fiscal deficits to fall relative to 2023. Most economies in the region should still have healthy growth,” the global debt watcher added.

Data showed the Philippines’ debt-to-GDP ratio stood at 60.2 percent by the end of 2023, down from 60.9 percent in 2022.

READ: PH debt still manageable, says Finance chief

The ratio however stayed above the 60-percent threshold that credit rating agencies deemed manageable for developing economies like the Philippines. This, as the government capped 2023 with an outstanding debt amounting to P14.62 trillion, up by 8.92 percent year-on-year.

The debt-to-GDP ratio is a closely-watched indicator of the government’s ability to settle its obligations. Economists believe that debt would stay at manageable levels as long as the economy grows faster than state liabilities.

Asia-Pacific sovereign debt stock

Finance Secretary Ralph Recto earlier said the Marcos administration is planning to borrow a total of P2.46-trillion from creditors at home and abroad this year to plug a projected budget deficit of P1.4 trillion.

S&P estimates that governments in the Asia-Pacific region would use nearly 75 percent (or $2.9 trillion) of their gross long-term commercial borrowings in 2024 to refinance maturing long-term debt.

”Projected issuance this year will raise the Asia-Pacific sovereign commercial debt stock to an equivalent of $20.6 trillion by the end of 2024, up by $1.68 trillion from 2023,” S&P said.