Government debt hits P1.86 trillion in 7 months

MANILA, Philippines — The government’s gross borrowings from January to July soared by more than 121 percent to P1.86 trillion from P840 billion in the same period last year as the country borrowed more to meet its pandemic needs, according to the  Bureau of the Treasury (BTr).

The amount is equivalent to almost 62 percent of the country’s P3 trillion borrowing program for the whole of 2020.

For  July alone, government debt reached P134.53 billion, a dramatic turnaround from last year’s figure, which settled in the negative territory due to the net repayment of domestic securities.

The Philippines is ramping up its borrowings to plug the deficit in its budget, which is expected to widen to P1.82 trillion or 9.6 percent of gross domestic product (GDP) due to weak revenue generation and increased spending requirements amid the pandemic.

In the first seven months, the bulk or P1.38 trillion of total borrowings came from domestic lenders, 125 percent higher than last year’s P611.06 billion.

About P417.86 billion of the amount came from the issuance of Treasury bonds (T-bonds), while  P347.26 billion came from the issuance of  Treasury bills (T-bills). Another P310.77 billion was raised through the recent Retail Treasury Bond (RTB) sale.

This also includes the P300 billion short-term loan from the Bangko Sentral ng Pilipinas (BSP) under a repurchase agreement with the BTr.

Meanwhile, external debt from January to July amounted to P481.15 billion, 110.39 percent higher than last year’s P228.69 billion.

Treasury data showed that P280.04 billion of the amount came in the form of program loans, while project loans from the country’s multilateral and bilateral partners amounted to P15.05 billion.

In a separate report, the Treasury said P157.13 billion of the total program loans came from the Asian Development Bank.

This was followed by the World Bank, which  extended P85.78 billion in loan financing and the Asian Infrastructure Investment Bank, which   provided another P37.13 billion during the review period.

The BTr said some P67.33 billion of the total foreign debt was also raised from the euro-denominated bond sale conducted by the Philippines back in February, while P118.74 billion came from the country’s  global bonds sale in May.

As the government continued to increase its borrowings to fund coronavirus response efforts, the country’s outstanding debt reached a new record-high of P9.16 trillion as of end-July.

Budget documents showed that the debt pile is expected to hit P10.16 trillion by the end of 2020, 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