Philippine debt could balloon to P20 trillion by end of Marcos’ term —Recto

The country’s sovereign debt could balloon to as much as P20 trillion by the end of President Ferdinand Marcos Jr.’s term in 2028, Finance Secretary Ralph Recto said Wednesday.

The Finance chief, however, downplayed concerns about the rising national government outstanding debt balance as he said the country’s economic growth would outpace the increase in debts.

“By 2028 ang utang ng Pilipinas ay roughly P20 trillion… Ang ekonomiya naman natin by 2028, ay nasa mga P37 trillion (By 2028, the Philippines’ debt could reach roughly P20 trillion… The economy, on the other hand, might be at P37 trillion by 2028),” Recto said at the Kapihan sa Manila Bay news forum.

“Ibig sabihin mas malaki ang kikitain ng pagkaraniwang Pilipino at mas malaki ang ekonomiya, mas maraming trabaho (This means that an ordinary Filipino’s income would be higher and the economy would be larger, translating to more jobs),” he said.

Recto added that about 70% of the country’s sovereign debt would be sourced locally, noting that “hindi po kayo dapat mabahala, dahil ang utang na ito, galing po sa sarili natin (you should not worry as this debt is sourced domestically).”

As of end-June 2024, the country’s running debt balance reached P15.48 trillion, up 9.4% from P14.15 trillion in the same period last year.

Of the total debt stock, 68.29% was sourced domestically while the remaining 31.71% came from external sources.

The Finance chief said the expected P20-trillion government debt stock is still consistent with the administration’s aim to bring down the debt-to-gross domestic product (GDP) ratio to less than 60% by 2028.

“Yes, it could be more or less 57% [of GDP],” Recto said.

The Marcos administration’s economic managers, in particular, are targeting to bring down the debt-to-GDP ratio by 56% come 2028.

Debt-to-GDP ratio measures the amount of the national government’s outstanding debt proportionate to the value of the economy during a specific period.

A lower debt-to-GDP ratio indicates that the country can pay off its debt without having adverse impacts on the economy.

“Kung ating titingnan ang debt-to-GDP ratio ng Pilipinas, unti-unti na po natin itong naibaba mula noong pandemya. Mula sa 60.9% noong 2022, bumaba na ito sa 60.1% noong 2023 (The debt-to-GDP ratio of the Philippines has gradually declined since the pandemic. From 60.9% in 2022, it went down to 60.1% in 2023),” Recto said.

Due to the aggressive borrowing spree to fund response, relief, and cash aid efforts amid the COVID-19 pandemic, the country’s debt-to-GDP grew to 60.5% in 2021, higher than the 54.6% level in 2020.

Prior to the COVID-19 pandemic, the Philippines’ debt-to-GDP ratio reached a record low of 39.6% in 2019.

“We are determined to continue pushing it below 60% so we have enough buffer in case another crisis hits us,” he added.

The Finance chief said the government is using debts to “spur stronger economic recovery by investing heavily in more infrastructure and human capital development projects, which have the highest multiplier effect on the economy.”—AOL, GMA Integrated News