Government debt shoots up to record P12.09 trillion

MANILA, Philippines — The country’s outstanding debt has risen to a fresh record P12.09 trillion as of February, which will necessitate the reopening of  the economy to the fullest to obtain additional revenues.

The Bureau of the Treasury yesterday said that the national debt rose by more than 16 percent in the 12 months to February on double-digit increases in domestic and external obligations.

Broken down, domestic debt grew by over 14 percent to P8.41 trillion while external debt went up by over 21 percent to P3.68 trillion, based on records.

Securities issued by the government accounted for the bulk of the domestic account at P8.11 trillion, while loans obtained by state agencies made up the remainder at P300.16 billion. Every week, the Treasury auctions short-dated and long-term bonds to raise funds for public spending.

On the other hand, more than 54 percent of the external volume, at P2 trillion, was comprised of foreign currency-denominated debt papers.  Loans acquired from multilateral institutions, used mostly for the completion of big-ticket projects, registered the other 46 percent at P1.68 trillion.

In February alone, the government piled an additional net P63.83 billion onto the debt stock, attributed to a variety of factors, including currency fluctuations and new borrowings.

According to the Treasury, the government added P44.89 billion to the domestic debt due to the net issuance of securities in weekly auctions.

Also, the external account grew by P17.91 billion due to peso depreciation against the US dollar and by P3.25 billion on the net availment of foreign obligations, mitigated only by a reduction of P2.74 billion thanks to value adjustments in other currencies.

As of February, the government’s guaranteed debt declined by nearly seven percent to P416.2 billion compared to the P446.72 billion debt recorded a year ago. By segment, domestic guaranteed debt fell by 23 percent to P188.89 billion, while external guaranteed debt surged by over 12 percent to P227.31 billion.

Michael Ricafort, chief economist at the Rizal Commercial Banking Corp., said the government may need to reopen the economy to full capacity to stimulate consumer and business activities. He pointed out that tax revenues would jump in a scenario where the entire Philippines is placed under Alert Level 1 to allow for the resumption of  face-to-face schooling and lifting of all border restrictions.

“Thus, all of these measures to further reopen the economy toward greater normalcy would help narrow the country’s budget deficit and help temper the growth in the government’s debt stock,” Ricafort said.

The government expects the debt stock to swell to an all-time high of P13.42 trillion, for 60.9 percent of the economy this year, prompting the Department of Finance to craft a list of fiscal reforms that the next administration could pursue to normalize state finances in the coming years.