Hefty loan from BSP lifts government's total debt beyond P10-T in October
The country's debt load amounted to P10.03 trillion as of October, up 7.03% or by P658.81 billion from the preceding month, the Bureau of the Treasury reported Friday.
STAR/File

Hefty loan from BSP lifts government's total debt beyond P10-T in October

Ian Nicolas Cigaral (Philstar.com) - December 4, 2020 - 4:27pm

MANILA, Philippines — A record loan from the central bank pushed up the state's total debt beyond the P10-trillion mark in October, as it continued to accumulate liabilities to foot the bill for a costly response to the second-worst coronavirus outbreak in Southeast Asia.

The government's debt load amounted to P10.03 trillion as of October, up 7.03% or by P658.81 billion from the preceding month, the Bureau of the Treasury reported Friday. October marked the fastest build-up of liabilities since they rose 5.2% last February, data showed.

Since the beginning of the year, obligations have accumulated by 29.70%, a dramatic rise that came as the Duterte administration heavily relies on borrowings to fight the virus that has sickened over 430,000 people in the country and thrown the economy into deep recession.

With no end in sight yet for the health crisis, the debt stock is expected to increase further as the government targets to cap the year with obligations up to P10.14 trillion.

Both domestic and external liabilities went up in October, figures showed.

BSP loan

Local debts, which accounted for 71.6% of the country's entire debt pile, surged 9.9% month-on-month to P7.08 trillion largely due to P540 billion that the government borrowed from the Bangko Sentral ng Pilipinas in October to meet the country's growing pandemic needs. 

The fresh cash lent by the BSP would carry zero interest and is payable until December 29. In March, the central bank bought P300 billion worth of government bonds — which had been repaid in October — to help beef up the country's pandemic war chest.

Apart from borrowings from the BSP, onshore debts climbed due to P982.22 billion proceeds from weekly auction of teasury bonds and bills while P738.54 billion was raised via sale of Retail Treasury Bonds earlier this year. Year-to-date, domestic obligations rose 38.0%.

On the other hand, offshore debts inched up by a smaller 0.7% month-on-month to P2.95 trillion due to availment of foreign loans amounting to P18.98 billion and third-currency appreciation against the US dollar that offset benefits from a firmer peso. Since January, foreign debts have increased by 13.3%.

If anything, the increased borrowings are necessary to bridge a record budget deficit this year, which is capped at 7.6% of gross domestic product. Large borrowings, in turn, are slowly translating into bigger debts, all while the economy shrinks into recession. 

Ballooning liabilities while the economy shrinks means a deterioration even in the proportion of debt to economic output, a globally accepted gauge of capability to settle obligations. From January to June, debt accounted for 48.1% of GDP, up from 43.4% in first quarter. Before the pandemic struck, the ratio settled at a record low of 39.6% in end-2019.

NOVEL CORONAVIRUS PHILIPPINE DEBT
Philstar
  • Latest
  • Trending
Latest
Recommended
Are you sure you want to log out?
X
Login

Philstar.com is one of the most vibrant, opinionated, discerning communities of readers on cyberspace. With your meaningful insights, help shape the stories that can shape the country. Sign up now!

FORGOT PASSWORD?
SIGN IN
or sign in with