EYEING a smaller budget deficit, the government has set a smaller borrowing program for next year at P2.47 trillion, down by nearly a fifth from P3.07 trillion this year.
Broken down, the government will be borrowing P1.91 trillion from domestic sources while the remaining P560.58 billion will come from external sources, 2022 budget documents showed.
National Treasurer Rosalia V. de Leon told reporters that next year’s borrowing program is smaller due to the expected reduction in the budget deficit.
In its July meeting, the Development Budget Coordination Committee (DBCC) said it expects the national government’s budget deficit to go down to P1.67 trillion or 7.5 percent of the country’s GDP from the programmed P1.86 trillion this year or 9.3 percent of GDP.
The government’s budget deficit stood at 3.4 percent of GDP or P660.2 billion in pre-pandemic 2019, and this has more than doubled to a record-high 7.6 percent of GDP or P1.37 trillion in 2020.
The government expects the downtrend in the budget deficit starting 2022 as the rise in revenues is expected to outpace the increase in disbursements.
Interestingly, the 2022 budget document did not state if the government will once again borrow from the Bangko Sentral ng Pilipinas (BSP), as it did while shoring up funds for the Covid-19 pandemic response.
However, De Leon clarified that they are not closing any doors, saying “it is still available.”
“We did not say no more BSP borrowings. It depends,” she said.
The last time the BSP extended a P540-billion short-term loan to the government was back in July.
Of the gross domestic borrowings next year, the bulk of the amount will be borrowed through fixed-rate Treasury Bonds amounting to P1.86 trillion while P52 billion will be raised through auctioning off Treasury Bills.
In terms of gross external borrowings, P353.5 billion will come from bonds and other inflows, P126.7 billion through program loans, and P80.37 billion via project loans.
2023 projections
For 2023, the government also projects an even smaller borrowing program of P2.31 trillion, down by 6.7 percent from the 2022 borrowing program. It is also expected that the budget deficit for 2023 will be further slashed to P1.43 trillion or 5.9 percent of GDP.
Meanwhile, 2022 budget documents also showed the national government expects outstanding debt by the end of the year to balloon to P11.73 trillion, up by 19.8 percent from P9.795 trillion in 2020. This is also projected to further swell in 2022 to P13.42 trillion, higher by 14.39 percent than the projected level of outstanding debt by the end of 2021.
From a record-low debt-to-GDP ratio of 39.6 percent in 2019, the country’s debt as a share of the economy surged to a 14-year-high of 54.6 percent in 2020.
Finance Secretary Carlos G. Dominguez III earlier said the debt-to-GDP ratio this year is projected to further rise to 59.1 percent and peak next year at 60.8 percent—slightly above the internationally accepted threshold—before gradually tapering off to 60.7 percent and 59.7 percent in 2023 and 2024.
The Department of Finance (DOF) sees the national government returning to its pre-pandemic debt and budget deficit levels as early as 2024 or by 2025 if the recommended fiscal measures are passed early by the next administration and if the economy quickly recovers.
Image courtesy of Nonie Reyes