National debt bloats to record high P12.9 trillion    

MANILA, Philippines — The outstanding debt of the national government jumped to a record P12.89 trillion as of end-July, with the Marcos administration adding some P96.1 billion in obligations in its first month in office, according to data from the Bureau of the Treasury. The debt stock is 0.8 percent higher than the P12.79 trillion debt recorded the month before and is 11 percent larger than the P11.61 trillion in obligations on a yearly basis.

During the first month of the new government, P96.09 billion has been added to the total debt due to the net issuances of domestic and external loans as well as currency adjustments.

The current debt stock of P12.89 trillion as of end-July is already 96 percent of the P13.43 trillion expected debt pile by the end of the year.

Rizal Commercial Banking Corp. chief economist Michael Ricafort noted that while government debt has continued to increase on a monthly basis, such a rate is already half the average monthly hike during the height of the pandemic.

An average P165 billion per month has been added to the debt pile since 2020 or roughly P2 trillion per year due to the need for cash assistance and the procurement of vaccines.

The previous administration had to resort to loans as government revenues dipped due to the economic downturn as businesses and activities were halted following mobility restrictions.

“To achieve the target (for the year], the average monthly increase in the outstanding debt would be around P108 billion, so the latest monthly increase of P96 billion is still better,” Ricafort said.

Nonetheless, Ricafort reiterated the need to intensify tax collections and implement tax reform measures.

He noted that fiscal reform measures such as disciplined spending, right sizing the government, preventing wastage in government spending, and anti-corruption measures to cut down on the debt are necessary.

The country’s debt level, when measured against the gross domestic product (GDP), decreased to 62.1 percent in the second quarter from the 17-year high of 63.5 percent in the first quarter.

But this ratio remains above the internationally accepted threshold of 60 percent, which puts the Philippines at a vulnerable spot in terms of its capacity to pay off its financial obligations.

Further, the Treasury said the majority or 68.5 percent of the debt pile were domestic borrowings and the remaining 31.5 percent were sourced externally.

Total domestic debt at P8.83 trillion inched up 0.7 percent on a monthly basis and jumped 8.8 percent from the P8.12 trillion year-on-year.

The increase was attributed to the net issuance of P64.33 billion in government securities and P740 million impact of local currency exchange against the US dollar.

The Philippine peso depreciated against the US dollar to P55.12 as of end-July.

Domestic debt has already increased by eight percent to P661.77 billion since the start of the year.

External obligations, on the other hand, also inched up by 0.8 percent to P4.06 trillion month-on-month and surged 16.2 percent from P3.49 trillion in the same period last year.

The Treasury said the increment in external debt was also due to the impact of local currency fluctuations against the US dollar amounting to P25.77 billion as well as the net availment of external financing worth P6 billion.

These were tempered by the P750 million effect of net depreciation against the US dollar on third-currency denominated obligations.

Meanwhile, total debt guaranteed obligations went down 1.4 percent to P408 billion due to the net repayment of both domestic and external guarantees amounting to P8.56 billion and P190 million, respectively.