Government debts swell to P1.51 trillion

From January to May

MANILA, Philippines – The Philippines borrowed around P1.51 trillion from domestic and foreign sources from January to May to raise funds for  COVID-19 response efforts, according to the Bureau of the Treasury (BTr).

According to the latest data from the BTr, the national government’s gross borrowings from January to May almost doubled to P1.51 trillion from P787.13 billion in the same period last year.

This was also higher compared to the government’s borrowings of P1.02 trillion for the whole of 2019.

For May alone, borrowings amounted to P289.82 billion, a sharp 130.73 percent increase from P125.61 billion last year.

The Philippines is ramping up its borrowings to plug the deficit in its budget, which is now expected to widen to P1.613 trillion or 8.4 percent of gross domestic product (GDP) due to COVID-19.

BTr data showed that around 76 percent of the total borrowings in the first five months came from domestic sources, while the remaining 24 percent came from foreign lenders. 

Domestic debt, in particular, amounted to P1.15 trillion, two times higher compared to the P576.02 billion recorded in the same period in 2019.

Of the total amount, P307.86 billion was raised through the issuance of fixed-rate Treasury bonds, while another P234.02 billion came from the sale of treasury bills.

Some P310 billion also accounted for the money raised by the BTr during its first Retail Treasury Bond (RTB) sale earlier this year.

Another P300 billion came from the short-term loan extended by the Bangko Sentral ng Pilipinas (BSP) under a repurchase agreement with the Treasury.

On the other hand, external borrowings from January to May surged by 69 percent to P356.64 billion from P211.11 billion a year ago.

The BTr said P162.79 billion of the amount came in the form of program loans from multilateral agencies, such as the World Bank and the Asian Development Bank. Another P7.79 billion was secured from project loans.

 Meanwhile, P67.33 billion of the total foreign debt was raised from the euro-denominated bond sale conducted by the Philippines back in February.

 Just this May, the government was also able to raise P118.74 billion in funds from its global bonds sale.

 The debt papers, which have maturities of 10 years and 25 years, were priced at the lowest coupon rate ever achieved by the Philippines despite uncertainties caused by the health crisis.

 With the state increasing its borrowings to fund its coronavirus response efforts, the national government’s debt pile has reached a new-record high of P8.89 trillion as of end-May.

 Despite this, Finance Secretary Carlos Dominguez earlier assured the public that the government’s debt level is still “manageable” and “affordable.”

 The Duterte administration is also looking to maintain its debt-to-GDP ratio at around 50 percent by the end of the year, which is within the median of its regional peers. This is coming from an all-time low of 39.6 percent as of the end of 2019.