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NG’s end-March debt hits record high of ₧10.77 trillion

THE national government’s outstanding debt as of end-March this year once again hit a new record high of P10.77 trillion as the decline in state revenues pushed the government to borrow more money to finance its spending requirements, especially during the Covid-19 pandemic.

Latest data from the Bureau of the Treasury showed the country’s outstanding debt was up by 3.5 percent from the previous record high of P10.4 trillion as of end-February this year.

The Treasury said the month-on-month uptick in the country’s debt stock was due to the net issuance of government securities.

Compared to P8.48 trillion a year ago, this was up by 27.1 percent. It also rose by 10 percent from the end-2020 level of P9.795 trillion.

Domestic borrowings comprised 72 percent of the total debt stock while the remaining 28 percent came from foreign sources.

The national government’s domestic debt as of end-March stood at P7.74 trillion, a 5.2-percent climb from the end-February level P7.36 trillion, primarily due to the net issuance of government securities, including P411.79 billion in Retail Treasury Bonds.

Year-on-year, domestic debt as of end-March surged by 33.2 percent from P5.8 trillion a year ago. It was also 15.7 percent more compared to the end-2020 level of P6.69 trillion.

On the other hand, external debt as of end-March this year settled at P3.029 trillion, lower by 0.45 percent from P3.04 trillion recorded in the previous month.

“For March, lower figures for external debt were due to the favorable net impact of both local- and third-currency fluctuations against the dollar amounting to P6.82 billion and P21.88 billion, respectively. These were more than enough to offset the net availment of foreign loans amounting to P15.15 billion,” the Treasury said.

The government’s external debt as of end-March also increased by 13.7 percent from P2.66 trillion a year ago. However, this was down by 2.3 percent from P3.1 trillion by the end of last year.

The national government’s total outstanding guaranteed debt as of end-March also shrank by 9.5 percent to P435.81 billion from P481.82 billion a year ago. It was also down by 2.4 percent from P446.72 billion in February this year.

“The lower level of guaranteed debt was due to the net redemption of both local and foreign guaranteed obligations amounting to P4.84 billion and P1.69 billion, respectively. Local- and third-currency exchange rate fluctuations further lowered the peso value of external guaranteed debt by P0.45 billion and P3.93 billion, respectively,” it added.

Domestic outstanding guaranteed debt for the month amounted to P239.28 billion, lower by 6.1 percent from last year’s P254.83 billion. It also declined by 2 percent from P244.12 billion in February this year.

Meanwhile, the government’s external guaranteed debt also contracted by 13.4 percent year-on-year to P196.53 billion from P227 billion in March 2020. It also slightly went down by 3 percent from P202.6 billion in February this year.

UnionBank Chief Economist Ruben Carlo Asuncion told BusinessMirror that the 3.5-percent rise in the outstanding debt was expected as the government continues to reel from the impact of the Covid-19 pandemic.

“The domestic sourcing-bias of debt is what government said it was going to continue to do. My sense is that, with the Covid-19 still raging, NG (national government) may continue to borrow, largely domestically, to continue to fund its operations and the fight against the pandemic,” he said.

The country aims to borrow a total of P3.03 trillion this year, roughly the same amount it borrowed in 2020.

Finance Secretary Carlos G. Dominguez III earlier said they expect the national government’s debt this year to reach 57 percent of GDP.  As of end-2020, the country’s debt to GDP ratio surged to 54.5 percent—a 14-year-high—coming from a record-low 39.6 percent in the previous year.

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