Philippines debt pile reaches record high P8.18 trillion

MANILA, Philippines — The country’s debt stock went up by 4.8 percent to an all-time high in end-March and is expected to rise further this year as the national government borrows heavily from domestic and foreign sources to boost its war chest in containing the coronavirus pandemic, according to the Bureau of the Treasury.

Preliminary data released by the BTr Thursday evening showed national government debt reached a record P8.18 trillion in end-March or P375.15 billion higher than the P7.8 trillion recorded in end-March last year.

The debt figure was 5.8 percent higher than the P7.73 trillion recorded in end 2019 and a 0.1 percent increase from February’s P8.16 trillion.

The Philippines continues to borrow heavily from both domestic and foreign lenders to finance the budget deficit as spending continues to outpace the revenues raised by the national government.

Borrowings from domestic sources accounted for 67 percent of total national government borrowings in end-March, while loans from foreign creditors cornered the remaining 33 percent.

Domestic borrowing increased by 6.1 percent to P5.51 trillion from P5.19 trillion in the same month last year as small investors gobbled up a record P310.8 billion worth of retail Treasury bonds (RTBs) last February.

Likewise, foreign borrowings by the national government inched up by 2.3 percent to P2.66 trillion from P2.6 trillion. Loan availments went up by 7.1 percent to P1.06 trillion from P988.43 billion, while issuance of external debt securities slipped by 1.2 percent to P1.6 trillion from P1.62 trillion.

External debt securities issued by the Philippines as of end-March consisted of US dollar bonds or notes with P1.22 trillion, euro bonds with P109.24 billion, Japanese yen or Samurai bonds with P116.33 billion, Chinese yuan or Panda bonds with P28.83 billion, and peso-denominated global bonds with P126.68 billion.

Finance Secretary Carlos Dominguez earlier raised the country’s budget deficit ceiling to 5.3 percent of gross domestic product (GDP) instead of 3.2 percent of GDP this year to meet the unexpected challenges to the Filipino people and the domestic economy of the coronavirus disease 2019 or COVID-19 pandemic.

As a result of the wider budget shortfall, Dominguez said the country’s debt-to-GDP ratio would also increase to about 46.7 percent this year from last year’s 41.5 percent.

Using the 2018 base, National Treasurer Rosalia de Leon said the adjusted debt-to-GDP ratio would now be 44.95 percent of GDP for this year as last year’s ratio was adjusted to 39.6 percent of GDP.

During the virtual meeting of the economic stimulus package sub-committee of the COVID-19 committee of the House of Representatives last April 21, Dominguez said the government’s war chest to fight the health crisis was raised to P1.49 trillion.

To raise the amount, the national government intends to borrow more from the domestic debt market via the issuance of Treasury bills and Treasury bonds as well as the foreign creditors including multilaterals lenders led by the Asian Development Bank (ADB) and the World Bank.

The national government is looking at borrowing close to $6 billion instead of only $2 billion from foreign creditors to bankroll efforts to mitigate the impact of COVID-19.