Philippines debt grows 20% to P11.73 trillion in 2021

MANILA, Philippines — The country’s outstanding debt grew by 20 percent to P11.73 trillion in 2021 from P9.8 trillion in 2020 due to double-digit increases in domestic and external obligations, the Bureau of the Treasury (BTr) said.

The latest debt level accounted for 60.5 percent of gross domestic product (GDP), raising concerns about the government’s capacity to pay.

According to the BTr, domestic debt jumped by more than 22 percent to P8.17 trillion in 2021 from P6.69 trillion a year ago while foreign obligations widened by 15 percent to P3.56 trillion from P3.1 trillion.

The government accumulated a total of P1.93 trillion in new debts in 2021, close to the P2.07 trillion added to the debt stock in 2020. By source, roughly 77 percent of the amount at P1.48 trillion was obtained from domestic creditors, while the rest was borrowed from foreign sources.

Further, the debt level, when measured against GDP, expanded to 60.5 percent last year from 54.6 percent in 2021. The latest debt-to-GDP ratio has now exceeded the government’s target of 59.1 percent and  the European standard of 60 percent.

The international community observes a debt threshold of 60 percent of  GDP as exceeding that marker may alarm credit monitors and multilateral lenders on the capacity of an economy to pay its obligations.

On the other hand, the year-end debt landed within the government’s target of P11.73 trillion as the outstanding debt slid for the second straight month in December 2021.

The debt pile hit a record P11.97 trillion in October 2021, but net redemptions in November and December pulled it to within target.

By type, nearly all of the domestic debts came in the form of government securities auctioned by the Treasury.

On the other hand, the government owes more than half of its external debts at P1.98 trillion to bond holders and the other P1.57 trillion to bilateral and multilateral lenders.

Guaranteed debt declined by eight percent to P423.92 billion last year  from P458.35 billion in 2020.