Government debt pile breaches P10 trillion mark

MANILA, Philippines — The country’s debt pile breached the P10-trillion mark in end-October as the government secured more loans from various sources, including the central bank, to support its COVID-19 response efforts, the Bureau of the Treasury (BTr) said yesterday.

According to the latest data from the BTr, the national government’s outstanding debt further rose by 7.03 percent to P10.03 trillion from P9.37 trillion in end-September.

“The total debt stock for the month grew by P658.81 billion or 7.03 percent from its end-September level primarily due to external and domestic loan availments,” the BTr said.

About P7.08 trillion of the total debt stock came from domestic lenders, a 9.9 percent increase from the end-September level of P6.44 trillion.

The BTr attributed this to the availment of P540 billion in additional short-term loans from the Bangko Sentral ng Pilipinas (BSP), as well as the net issuance of domestic government securities in October.

Meanwhile, the BTr said outstanding foreign debt climbed by 0.7 percent to P2.95 trillion from P2.93 trillion the previous month.

“For October, the increment in external debt was attributed to the P18.98 billion net availment of external loans and P2.42 billion net appreciation of third-currency against the US dollars, offsetting the effect of local-currency appreciation amounting to P1.57 billion,” the Treasury said.

Since the start of the year, the national government’s outstanding debt has increased by 29.7 percent, coming from P7.73 trillion in end-2019.

Gross financing from January to October reached P2.835 trillion, which is 94.5 percent of the P3-trillion borrowing program for 2020.

Domestic borrowings in the first 10 months amounted to P2.26 trillion, accounting for almost 80 percent of total debt.

The BTr said Treasury bills (net) totaled P420.31 billion, while Treasury bonds and retail Treasury bonds amounted to P561.91 billion and P738.54 billion, respectively, net of P88.56 billion in domestic bond exchange.

Short term borrowings from the BSP stood at P540 billion after the government unwinded its P300-billion repurchase agreement with the central bank last September, the Treasury said.

External borrowings, meanwhile, reached P574.43 billion in the first 10 months.

Meanwhile, the BTr said total guaranteed obligations as of end-October inched up by 0.55 percent to P447.85 billion from P445.4 billion the previous month

“The increment was due to the net availment of domestic guarantees amounting to P1.83 billion and the net effect of third-currency appreciation against the US dollar that increased the value of external guarantees by P770 million. These more than offset the P150 million effect of local currency appreciation and repayment of external guarantees,” the Treasury said.

The Philippines is ramping up its borrowings to plug the deficit in the budget, which is expected to reach 7.6 percent of gross domestic product (GDP) this year amid weak revenue generation and higher spending requirements.

By the end of the year, the Philippines’ outstanding debt is seen to hit P10.16 trillion, before further increasing to P11.98 trillion in 2021. These would translate to a debt-to-gross domestic product level of 53.9 percent for 2020 and 58.1 percent for 2021.