Treasury: Philippine gov’t debt rose to new record P12.68T as of end-March

National government’s running debt balance hit a new record-high of P12.68 trillion as of end-March 2022, the Bureau of the Treasury reports. pic.twitter.com/Tgqx3igO1m

— Ted Cordero (@Ted_Cordero) May 5, 2022

The Philippine government’s running debt balance widened further and reached a new record-high as of end-March this year amid continued borrowing efforts to boost the state’s war chest for COVID-19 recovery measures coupled with a weaker local currency during the period, the Bureau of the Treasury (BTr) reported Thursday.

Treasury data showed the national government outstanding debt amounted to P12.68 trillion, 4.8% or P586.29 billion higher than the P12.09 trillion recorded as of end-February 2022.

The Treasury attributed the increase in the total debt stock “primarily due to the net issuance of government securities to both local and external lenders.”

Broken down, the national government’s running debt was 69.9% sourced locally and 30.1% sourced externally.

“We assure our people that the country’s borrowings, which put the county’s outstanding debt to more than P12 trillion, as of the end of March 2022, shall be put into good use and utilized effectively and efficiently,” acting presidential spokesperson Martin Andanar said in a statement.

“Recent borrowings would be for our COVID-19 response and recovery and resiliency efforts. We need to sustain our country’s long-term socioeconomic growth and development,” Andanar added.

Sought for comment, Rizal Commercial Banking Corp. chief economist Michael Ricafort said the increase in the debt portfolio “largely reflects P457.8 million Retail Treasury Bond (RTB) issuance and the $2.25 billion global/ROP bond issuance by the national government, both of which were settled in March 2022 and added to the government’s overall debt; partly to finance increased infrastructure spending and other government projects before the May 2022 elections in view of the 45-day ban on some public works since March 25, also to fund increased fuel subsidies for the transport and agricultural sectors as well as to finance various COVID-19 programs.”

In particular, the national government domestic debt stood at P8.87 trillion,  up by P455.45 billion or 5.4% compared to the P8.4-trillion as of end-February 2022.

“For March, the NG successfully raised P457.80 billion through its domestic Retail Treasury Bond issuance and debt exchange transaction,” the Treasury said.

The government’s foreign debt, meanwhile, totaled P3.81 trillion, up by P130.84 billion or 3.6% from P3.7 trillion as of end-February 2022.

“The increment to external debt was due to the net availment of external financing amounting to P122.69 billion including the P117.33 billion ($2.25 billion) triple tranche five-year, 10.5-year and 25-year Global Bonds,” the BTr said.

“Meanwhile, the effect of peso depreciation against the US dollar added P37.31 billion which was tempered by adjustments in third currencies which trimmed P29.17 billion,” it added, noting that the local currency weakened against the dollar from P51.385:$1 as of end-February to P51.906:$1 as of end-March.

Finance Secretary Carlos Dominguez earlier defended the uptick country’s programmed debt, which is expected to hit the internationally recommended threshold of 60% proportion of gross domestic product this year.

The Philippines ended 2021 with a debt-to-GDP ratio of 60.5%, slightly higher within the accepted sustainable threshold.

Dominguez earlier said the Department of Finance (DOF) is preparing its fiscal consolidation proposal which would likely involve tax hikes to repay the country’s increasing debt.

The Finance chief has also expressed willingness to sit down with all the presidential candidates to discuss how to manage the trillions of pesos in government debt the next presidency will inherit from the Duterte administration.

“The new Philippine president/administration needs to sustain the country’s economic and fiscal reform measures, in terms of tax reform measures, intensified tax collections structurally improve further the government’s recurring tax revenue collections, as well as good governance/anti-corruption/anti-wastage measures to further improve government expenditures...,” Ricafort said.

“...all of which help better manage country’s budget deficit, fiscal performance, and overall debt management, by helping ease the country’s debt-to-GDP ratio from the 60% international threshold recently through faster economic/GDP growth as seen in recent years/decades, to support the country’s long-term economic growth and development especially for the coming generations,” he said. — RSJ, GMA News