Philippine gov’t debt balloons to new record-high P11.166T as of end-June

The national government’s running debt balance widened further to a new record-high of P11.166 trillion as of end-June 2021, data released by the Bureau of the Treasury (BTr) showed Thursday.

LOOK: The national government’s running debt balance further balloons to a new record-high of P11.166 trillion as of end-June 2021, widening by P95 billion or 0.9% from P11.071 trillion as of end-May 2021. @gmanews pic.twitter.com/YUt2z1J89B

— Ted Cordero (@Ted_Cordero) July 29, 2021

The government’s end-June outstanding debt slightly grew by 0.9% or P94.91 billion from the end-May level of P11.071 trillion.

Year-on-year, the debt stock rose by 23.3% from P9.054 trillion as of end-June 2020.

The government‘s debt balance comprises 71.1% domestic borrowings and 28.9% external borrowings.

“Outstanding national government debt continued to rise amid relatively wider budget deficits in recent months after the tighter restrictions/quarantine standards since the latter part of March 2021 increased government spending on various COVID-19 programs, partly due to the 1.5-month lockdowns in NCR Plus, as tax revenue collections eased recently,” Rizal Commercial Banking Corp. chief economist Michael Ricafort said in an emailed commentary.

Ricafort explained that tax payment or collections normalized compared to the two-month deferral of the yearly tax filings a year ago to June 2020 from April 2020, “in view of the ECQ/hard lockdowns back then, thereby resulting in higher base/denominator effects as of June 2021.”

Notably, the national government’s fiscal balance swung back to a deficit of P149.9 billion from P1.8-billion recorded in June 2020 due to the decline in revenue collection as the payment of income taxes remained on April 15, 2021, whereas in 2020, it was extended to June in light of the implementation of strict quarantine protocols amid the COVID-19 pandemic.

“Increased government spending especially on infrastructure to help pump-prime the economy as a major pillar of the economic recovery program also led to wider budget deficits and some pick up in outstanding government debt recently,” Ricafort said.

Data from the Treasury showed the national government’s expenditure for June amounted to P395.4 billion, up 13.24% year-on-year attributed largely to the disbursements for infrastructure programs and capital outlay projects.

In particular, domestic debt stood at P7.938 trillion, up 0.3% from end-May 2021’s level of P7.915 trillion “as a result of net issuance of government securities.”

Foreign debt, meanwhile, amounted to P3.227 trillion, up 2.3% from the previous month.

“The increase in external debt was due to the impact of local-currency depreciation against the US dollar amounting to P64.86 billion and net availment of foreign loans amounting to P25.52 billion,” the BTr said.

“These were tempered by the P18.27 billion decrease in the peso value of debt denominated in other currencies such as euro and Japanese yen due to currency depreciation,” it said.

As of the government ramped up its borrowing efforts to boost its war-chest to address the COVID-19 pandemic since last year, the cost of  liabilities relative to the size of the economy or debt-to-gross domestic product ratio (GDP) climbed to 60.4%, slightly higher than the international threshold of 60% considered as “manageable” level.

A lower debt-to-GDP ratio is generally seen as favorable, as it indicates that the country is able to repay its debts.

“The increase in the government’s debt would still remain sustainable in the coming years for as long as the debt-to-GDP ratio remains around 60%, which is considered an important international threshold,” Ricafort said.—AOL, GMA News