Gov't debts post mild uptick in November as peso gains cut foreign borrowings
MANILA, Philippines — The government’s debt stock posted a mild uptick in November last year, tempered by an appreciating peso that cut foreign liabilities.
Data from the Bureau of Treasury showed the government was P13.64 trillion in debt in November, up 0.02% month-on-month. Of the total debt stock, 69.1% was sourced domestically while 30.9% came from foreign creditors.
The debt pile’s ascent came about as the peso recovered lost ground against the US dollar, offering some respite from foreign currency-denominated loans. Since the beginning of the year, debt levels stockpiled 16.33%.
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 plump debt stock would mean more taxpayers' funds are needed for debt servicing in the coming years. The situation also means that the Marcos Jr. administration would run the government and institute reforms with a very tight fiscal space.
Even then, Finance secretary Benjamin Diokno reiterated in December that the country’s liabilities were still “manageable”, arguing that outstanding obligations have long payment terms. The country’s debt-to-gross domestic product ratio hit a 17-year high of 63.7% in the third quarter of 2022, breaching the 60% threshold deemed manageable for emerging market economies.
Broken down, domestic borrowings rose 0.78% month-on-month to P9.43 trillion in November. The national government issued P75.76 billion in securities to support its operations.
External debt retreated 1.62% month-on-month to P4.22 trillion. The impact of the peso’s gains amounted to P106.98 billion.
Nicholas Antonio Mapa, senior economist at ING Bank in Manila, noted that debt stock’s ascent was expected.
“The sustained increase in debt was expected as the country continues to push forward with increased collections amidst still sizable outlays,” he said in a Viber message.
“The concern however is focused on the economy’s ability to outpace the rise in debt. So far growth has surprised on the upside but debt is up 14.4 percent for the year,” Mapa added.
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