Debt swells to nearly P12 trillion

MANILA, Philippines — The country’s outstanding debt nearly hit the P12-trillion mark in end-October, forcing the government to slow its borrowings to keep its financial obligations within sustainable levels.

The Bureau of the Treasury reported yesterday that the debt pile grew more than 19 percent to P11.97 trillion in the past 12 months as the government extended its borrowing spree to fund its pandemic response measures.

The government has accumulated P2.18 trillion in debt so far this year and has also breached its program of ending 2021 with just P11.73 trillion in outstanding obligations.

The bulk of the debt stock came from the domestic market, rising by 20 percent to P8.47 trillion mostly on issuances of securities to local investors.

Bonds sold by the government accounted for around 94 percent at P7.93 trillion, while loans taken from various sources made up the other six percent at P540.16 billion.

On the other hand, external borrowings increased by 19 percent to P3.5 trillion on a mix of debt papers and loans.

Debt papers comprised over 56 percent of the offshore volume at P1.97 trillion, while loans took up the remaining 44 percent at P1.53 trillion.

For October alone, the government posted a net debt of P54.48 billion, comprised of P80.65 billion in net issuance of domestic securities, mitigated by a P26.17-billion reduction in foreign obligations.

According to the Treasury, external debt went down to one percent on a monthly basis due to the impact of local and foreign currency rate adjustments of P22.68 billion and P8.45 billion, respectively. As such, it offset the net acquisition of P4.96 billion in foreign debts.

The debt stock as a proportion of gross domestic product (GDP) shot up to a 16-year high of 63.1 percent as of the third quarter, going past the international threshold of 60 percent.

In 2005, the Arroyo administration posted a debt-to-GDP ratio of 65.7 percent, following a record 71.6 percent the prior year.

As the outstanding debt keeps on spiraling, the Treasury opted to cut its borrowing program for December to P70 billion from P200 billion in November.

The Treasury aims to keep the debt pile within sustainable levels. It is preparing for a borrowing slowdown next year.