Government debt hits record P8.6 trillion

MANILA, Philippines — The government’s debt stock rose to a new record high of P8.6 trillion as of end-April following the net issuance of government securities and the availment of foreign loans to fund coronavirus disease 2019 or COVID-19 response, the Bureau of the Treasury (BTr) reported yesterday.

According to the latest data from the BTr, the government’s debt pile rose by 1.5 percent or P122.89 billion to P8.6 trillion as of end-April from P8.48 trillion a month ago.

The Treasury said the outstanding debt also went up by 11.2 percent from the P7.73 trillion recorded as of end-2019 and by 10.4 percent from P7.79 trillion in April 2019.

The government borrows from both domestic and external lenders to plug the expected deficit in its budget, which is now expected to widen to P1.56 trillion or 8.1 percent of gross domestic product (GDP) due to the pandemic.

Treasury data showed that the bulk or 67 percent of the debt stock came from domestic lenders, while the remaining 33 percent was sourced externally.

Domestic debt reached P5.86 trillion as of end-April, slightly up from the end-March level of P5.81 trillion.

The Treasury explained that the end-March domestic debt was revised to reflect the P300 billion short-term borrowing from the Bangko Sentral ng Pilipinas (BSP) under a repurchase agreement.

As for April, the Treasury said the increase was driven by the net issuance of domestic government securities amounting to P50.82 billion, offsetting the impact of peso appreciation which diminished the value of onshore dollar bonds by P170 million.

To date, the BTr said domestic debt increased by P735.92 billion or 14.4 percent from the end-2019 figure of P5.13 trillion as a result of net debt issuance and the short-term borrowing from the BSP.

External debt, likewise, grew by 2.7 percent to P2.74 trillion from P2.66 trillion in the previous month due to the net availment of external loans amounting to P87.34 billion for COVID-19 response.

The government secured in April a $1.5 billion loan from the Asian Development Bank for the COVID-19 Active Response and Expenditure Program, plus another $200 million loan for the Social Protection Support Project.

The World Bank also extended a $500 million loan for the Third Disaster Risk Management Development Policy Loan and another $100 million financing assistance for the COVID-19 Emergency Response Project of the Department of Health.

These offset the impact of currency adjustments, which trimmed foreign borrowings by P15.1 billion.