MANILA, Philippines — The national government’s debt stock tipped over the P13-trillion line in August, leaving the state of the country’s fiscal space in a delicate position.
What’s new
Treasury data released on Thursday revealed that government liabilities reached P13.02 trillion in August, growing 1% month-on-month. Of the outstanding debt levels, 68.7% came from domestic borrowings while 31.3% came from external creditors.
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The debt pile's ascent was mainly due to the issuance of government securities and a weak peso, which can bloat the value of foreign debts. Since the beginning of the year, debts have piled up by 11% or P1.29 trillion.
Why this matters
Experts have been warning about the impact of a growing debt pile for the Philippines. The country’s debt stock climbed at the onset of the pandemic, due in part to the Duterte administration’s borrowing spree to fund its pandemic response.
A fattening debt stock would mean more taxpayers' funds are needed for debt servicing in the coming years. The situation also means that the incoming Marcos Jr. administration would run the government and institute reforms with a very tight fiscal space.
By the end of 2021, state liabilities already accounted for 60.5% of the country’s gross domestic product, the highest ratio since 2005 and breaching the 60% threshold deemed manageable for emerging market economies.
Other figures
- Broken down, domestic borrowings reached P8.94 trillion in August, rising 1.3% from the end-July level. This included the issuance of domestic securities that amounted to P109.43 billion.
- External debt grew 0.6% in the same period, largely due to the effect of a depreciating peso that cost P62.24 billion.