Government debts slightly ease to P11.93-T in November — Treasury

MANILA, Philippines — The national government's outstanding debt inched down in November owing to payments of some domestic liabilities and favorable foreign exchange rates that pushed down the value of external borrowings.

What's new

The Bureau of Treasury reported on Wednesday that the total outstanding debt stood at P11.93 trillion in November, lower by 0.3% month-on-month.

Domestic debt levels amounted to P8.44 trillion in November, down 0.3% from October's level due to the net redemption of government securities. Year-to-date, domestic debt has risen incrementally to P1.75 trillion.

External debt, on the other hand, declined 0.4% in November compared to the preceding month owing to the appreciation of the peso against foreign currencies. From January to November, the government's external debt rose 12.6%.

Why this matters

The latest Treasury data showed obligations in November were still above the government’s debt program for the entire 2021, which is set at P11.73 trillion. In the first half, the debt load already accounted for 60.4% of gross domestic product, breaching the 60-percent ceiling that is deemed manageable by global debt watchers.

Economic managers see outstanding liabilities jumping to P13.41 trillion by the end of 2022, when President Rodrigo Duterte’s successor would have already taken over.

While the growth of debts might alarm some observers, the additional borrowings were necessary for the Philippines to survive the pandemic. As the economy remains weak due to prolonged lockdowns, the government is not generating enough revenues to shoulder the costs of its pandemic response. The Duterte administration has set the budget deficit limit at 9.3% of gross domestic product for this year.

What an analyst says

In a commentary, Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said more easing of movement restrictions could help bring down liabilities.

“Further re-opening of the economy would help increase business activities that help increase tax revenue collection and also help reduced government spending on various COVID programs, thereby narrowing the budget deficit and, in turn, reduced the need for more borrowings,” Ricafort said.

Other figures

• The national governments guaranteed debt obligations eased 2% month-on-month to P417.84 billion in November, due to the net redemption of both domestic and external guarantees.