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Pandemic funding drives gov't debt to new record-high P11.2-T

Ramon Royandoyan - Philstar.com
Pandemic funding drives gov't debt to new record-high P11.2-T
The state’s debt burden stood at P11.2 trillion by end-June, growing 0.9% month-on-month, the Bureau of the Treasury reported Thursday. Since the beginning of the year, liabilities have accumulated by 14%, figures showed.
STAR / File

MANILA, Philippines — The government’s outstanding debt continued its ascent in June to reach a new record-high, fueled by the Duterte administration’s borrowing spree to fund its pandemic response.

The state’s debt burden stood at P11.2 trillion by end-June, growing 0.9% month-on-month, the Bureau of the Treasury reported Thursday. Since the beginning of the year, liabilities have accumulated by 14%, figures showed.

Dissecting the Treasury’s report, both local and foreign debts inched up in June, with a weaker peso bloating the value of external obligations. Domestic liabilities continued to dominate the borrowing mix, accounting for 71.1% of the total debt pile.

The sustained rise of debts was expected. Economic managers have set a budget deficit ceiling that is equivalent to 9.3% of gross domestic product this year to cover ballooning pandemic expenses, and more borrowings are needed to bridge the fiscal gap as tax collections remain anemic due to depressed economic activity.

Data showed domestic debts stood at P7.9 trillion in June, up 0.3% month-on-month due to regular sale of government securities like Treasury bonds and bills.

External debts, on the other hand, grew a higher 2.3% from the previous month to P3.2 trillion after the government added P25.52 billion worth of foreign loans to its external debt pile, while a sliding currency pushed up the value of US dollar-denominated debts.

Already, several observers, including debt watcher Fitch Ratings, have sounded the alarm after government debts, as a share of the economy, breached the globally acceptable threshold of 60% of GDP. At this rate, Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said it is important for the economy outrun the growth of debt to avert a credit rating downgrade.

“The country's debt-to-GDP ratio is still expected to be within the international acceptable threshold of 60% of GDP, especially if GDP continues to recover in the coming months/years, thereby giving the government greater leeway to increase spending,” Ricafort said in an e-mailed commentary.

This year, the government is eyeing to borrow P3.02 trillion from foreign and local creditors.

NOVEL CORONAVIRUS PHILIPPINE DEBT PHILIPPINE ECONOMY
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