Philippines to borrow P2.46T in 2024 — DBM data

The Philippine government is set to borrow over P2 trillion in 2024 to fund portions of the proposed P5.768 trillion national budget next year.

Data from the Department of Budget and Management’s (DBM) Budget of Expenditures and Sources of Financing for Fiscal Year 2024 showed the borrowing program next year stands at P2.46 trillion, higher than the P2.207 trillion borrowing program this year.

Broken down, the borrowing program next year comprises P606.85 billion in gross external borrowings and P1.853 trillion gross domestic borrowings.

The foreign borrowing will be sourced as follows:

• P295.845 billion program loans
• P36.005 billion project loans
• P275 billion bonds and other inflows

Meanwhile, domestic borrowings will be sourced from the following:

• P51.05 billion treasury bills
• P1.802 trillion fixed rate treasury bonds

At a Palace briefing, DBM Undersecretary Joselito Basilio said borrowing “would be 11% of the pie,” “consistent with the medium term fiscal framework.”

As of end-June this year, the Marcos administration has borrowed P1.327 trillion.

This brought the country’s outstanding sovereign debt to a new record high of P14.15 trillion as of end-June 2023, up 0.4% from P14.10 trillion as of end-May.

The month-on-month increase was attributed “primarily due to the net issuance of domestic securities,” according to the Treasury.

Of the total debt balance, 68.6% were sourced locally while the remaining 31.4% were from foreign sources.

Broken down, domestic debt totaled P9.70 trillion, up.2% from as of end-May.

Gov’t borrowing program to decline

In a chance interview, Basilio said that in the coming years, the government’s borrowing program will gradually decline as the country recovers from the COVID-19 pandemic.

The previous administration embarked in an aggressive borrowing spree to fund its response and recovery efforts as the pandemic-induced lockdown triggered economic contractions in 2020 throughout the middle of 2021.

“From now until 2025 and 2026, it [borrowing] will peak… by 2027 and 2028, it will go down,” Basilio said.

The government is targeting to bring down the debt-to-gross domestic product (GDP) ratio to less than 60% by 2025, then further down to 51.1 percent in 2028, and reduce the budget deficit to 3.0% of GDP by 2028.

As of the first quarter of 2023, the country’s debt-to-GDP ratio stood at 61%, down from 63.5% in the first quarter of 2022.

The debt-to-GDP ratio represents the amount of the government’s debt stock relative to the size of the economy.

The Philippines ended 2022 with a debt-to-GDP ratio of 60.9% down from the 63.7% level as of the third quarter of last year —a 17-year high or the highest since 2005. 

This is the highest debt-to-GDP ratio since 2005, when it hit 65.7%, well over the internationally recommended threshold of 60%. — RSJ, GMA Integrated News