Philippine gov't debt nears P13-T mark as of end-July

The Philippine government’s running debt swelled to a new record-high at P12.89 trillion, nearing the P13-trillion mark as of end-July 2022, data released by the Bureau of the Treasury (BTr) on Saturday shows.

The debt stock as of the end of the seventh month of the year grew 0.8% or by P96.09 billion from the end-June 2022 level of P12.79 trillion.

JUST IN: The national government’s total debt pile is nearing the P13-trillion mark as it rose to new record-high of P12.89 trillion as of end-July 2022, data from the Treasury shows. | via @Ted_Cordero pic.twitter.com/iyyB8x25Ao

— GMA News (@gmanews) September 3, 2022

The Treasury attributed the increase to “the net issuances of domestic and external loans as well as currency adjustments.”

The end-July 2022 debt level also rose by 11% or by P1.277 trillion from the end-July 2021 outstanding debt of P11.61 trillion.

Since end-December 2021, the government debt widened by 9.9% or P1.16 trillion.

The total debt stock as of end-July 2022 was composed mostly of domestic borrowings at 68.5% while the remaining 31.5% were foreign borrowings.

Nonetheless, the debt-to-gross domestic product (GDP) ratio — the amount of the state’s debt relative to the size of the economy — improved to 62.1% of the second quarter of the year from 63.5% of the first quarter, albeit still above the internationally accepted “manageable” threshold. 

Finance Secretary Benjamin Diokno earlier said the Marcos administration is expected to borrow more than P1 trillion to plug the projected fiscal shortfall next year. 

However, he had said that the debt levels seen during the Duterte administration will no longer be seen in the current regime.

President Ferdinand Marcos Jr. also vowed that the government would bring down the country’s debt to less than 60% debt-to-gross domestic product (GDP) ratio by 2025.

The previous administration embarked on a borrowing spree to boost state coffers to respond to the COVID-19 pandemic —providing cash aids to vulnerable sectors, procuring vaccines to immunize the population, among others —as it implemented hard lockdowns to control the spread of the disease, causing economic activity to contract which affected state revenue collection.

The Finance chief said earlier that the debt-to-GDP ratio would gradually decline to 61.8% this year, 61.3% by 2023, 60.6% by 2024, and 59.3% by 2025.

By the end of the Marcos administration in 2028, the debt level will be down to 52.5%.

Before the COVID-19 pandemic, the country’s debt-to-GDP ratio hit a record low of 39.6%.

Domestic debt, on the other hand, totaled P8.83 trillion, up 0.7% or higher by P65.07 than the end-June 2022 level of P8.8 trillion.

“For July, the increase in domestic debt resulted from the net issuance of government securities amounting to P64.33 billion and the P740 million impact of local currency depreciation against the US dollar,” the Treasury said, noting that the Philippine peso depreciated against the US dollar from P54.970:$1 as of end-June 2022 to P55.322:$1 as of end-July 2022.

Since the beginning of the year, domestic debt has grown by P661.77 billion or 8.1%.

Foreign debt stood at P4.06 trillion, up 0.8% or higher by P31.02 billion than the end-June 2022 level of P4.024 trillion.

“The increment in the level of external debt was attributed to the impact of local currency depreciation against the US dollar amounting to P25.77 billion and net availment of external financing amounting to P6.00 billion,” the BTr said.

“These were tempered by the P750 million effect of third-currency depreciation against the US dollar,” it said.

The government’s external debt has increased by P497.60 billion or 14.0% from the end- December 2021 level of P3.6 trillion. —LBG, GMA News