Philippines’ debt seen rising to P15.8 trillion in 2024

The country’s outstanding debt is expected to increase to P15.8 trillion in 2024, National Treasurer Rosalia de Leon said on Tuesday.

The official made the disclosure when Senate Minority Leader Aquilino “Koko” Pimentel III asked about the projected level of debt by the end of the coming year.

“In 2024 po, ang aming projection of outstanding debt would be P15.8 trillion,” De Leon said at the economic managers' briefing on the 2024 National Expenditure Program before the Senate Committee on Finance.

(Our projection of the outstanding debt in 2024 is P15.8 trillion.)

De Leon said the government had set aside P1.9 trillion for debt principal and interest payments for 2024, with P1.2 trillion designated for the payment of the principal debt and P670.5 billion for interest payments.

Pimentel asked why economic managers had yet to be bothered by the “ballooning debt.”

“Parang the economic planners know something that I really cannot understand. How come the position is we should not worry about debts?” Pimentel asked.

(It seems the economic planners know something that I really cannot understand. How come the position is we should not worry about debts?)

De Leon cited data that showed the Philippines' debt-to-gross domestic product ratio of 61% to be at par with Malaysia's which is 61.57%, and Thailand's which is around the same.

Singapore is said to have a debt-to-GDP ratio of 167.7%.

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

De Leon said the country’s debt profile or the structure of the country’s debt was “very resilient.”

The national treasurer said that 90% of the country’s debt maturities were medium and long term which meant less “refinancing risks.”

“So the variable cost that would be subject to changes in the market conditions because of higher interest rate, mga 10% lang po siya," De Leon said.

"At the same time… around 70% of our debt [is] peso-denominated. So, wala po tayong mga volatility so much in terms of mga headwinds that would affect our debt service,” she added.

(So we do not have much volatility in terms of headwinds that would affect our debt service.)

De Leon said credit rating agencies such as Fitch even upgraded the outlook on the Philippines from “negative to stable.”

Further, the national treasurer said the Philippines had a “very stable” premium over the US Treasury which meant that “a lot of investors would rather hold Philippine papers than other sovereigns.”

“With that told, makikita po na very manageable and sustainable po ang ating debt structure,” De Leon said.

Finance Secretary Benjamin Diokno echoed De Leon’s explanation, saying the Philippines’ debt-to-GDP ratio was still at a “manageable range.”

He said that even Japan and the United States had close to 300% and about 200% debt-to-GDP ratio, respectively.

“So hindi po nakakatakot ‘yung debt-to-GDP ratio na ‘yon [of the Philippines],” Diokno said.

(So that debt-to-GDP ratio is not scary.)

But Pimentel asked why can’t the government bring down the absolute amount that the Philippines borrowed.

De Leon said the country is still in a “deficit” which meant that the Philippines still needed to continue borrowing to finance the budget.

In explaining the DBCC’s position, NEDA Secretary Arsenio Balisacan said the Philippines had to have access to external and internal resources for the Philippines to develop and grow quickly.

The Philippines can grow without borrowing but it should be content with 1% to 3% growth, Balisacan said.

“Is that the growth we want? Obviously, we’ll not be able to become even an upper-middle country in the next 20 years if that’s the only growth that we are aspiring for,” Balisacan said.

“As long as the economic expands much more faster than the debt, the debt ratio should fall over time and I think that is what we are watching and that’s what we have indicated in our medium-term development framework that we would want to see this debt stock as a proportion of our economy falling over time,” he added.

At the latter part of the hearing, Senator Ronald “Bato” dela Rosa asked if Filipinos should panic over the country’s debt but Diokno reiterated that the country’s debt is nothing to worry about and echoed Balisacan’s remarks that the government is committed to investing in infrastructure to help the economy grow.

However, Senate Deputy Minority Leader Risa Hontiveros refuted Diokno, saying many poor Filipinos should still worry about the country’s debt.

“Madali po sigurong sabihin ‘wag tayong mag-aalala sa utang, pero tulad ni Sen. Koko [Pimentel] nag-aalala po ako and sa totoo lang. ‘Di po tayo dapat mag-overpromise kung nag-a-underdeliver pa,” Hontiveros said.

“Kasi pakiramdam po ng karamihan na, I think, kung pakikinggan po natin yung iba't ibang sectors, nasa krisis po sila at… Hindi po sila nakikinabang talaga sa kumpletong libreng health care. ‘Yung mga problema sa proteksyon, damang-dama pa rin nila. Hindi pa rin nila naranasan na magmura na ang pagkain... In terms of social protection, yun na nga, hindi pa nila pakiramdam na protektado sila,” she went on.

(I think if we would listen to the different sectors, they are still in crisis... They have yet to benefit from free and complete health care. They still feel the problems as regards protection. They have yet to see the cost of food go down... In terms of social protection, they have yet to feel that they are protected.)

As of the end of June, the country’s debt reached a new record high at P14.15 trillion.

The government has earmarked 12.1% or P699.2 billion of the proposed P5.768 trillion national budget next year to finance payment for obligations or debt burden. —NB, GMA Integrated News