THE national government’s outstanding debt breached the P11-trillion mark in May as it ballooned to a new record high.
The government’s debt stock as of end-May hit P11.07 trillion, soaring by 24.5 percent from P8.89 trillion a year ago, according to the data from the Bureau of the Treasury.
The Treasury said a strong peso prevented the debt stock from further swelling, resulting in a slight month-on-month uptick of 0.7 percent from P10.991 trillion as of end-April this year.
Year-to-date, the national government’s outstanding debt swelled by 13 percent from the end-2020 level of P9.795 trillion.
Domestic borrowings comprised 71.5 percent of the total debt stock while the remaining 28.5 percent came from foreign sources.
Broken down, domestic debt as of end-May reached P7.9 trillion, jumping by 31.2 percent from P6.03 trillion a year ago.
It was also 1.3 percent higher than P7.8 trillion as of end-April this year as a result of the net issuance of government
securities.
Meanwhile, domestic debt also surged 18.2 percent from P6.69 trillion as of end-2020.
On the other hand, external debt climbed to P3.16 trillion, a 10.5-percent increase from P2.86 trillion a year ago due to the appreciation of the peso against the US dollar and the net repayment of foreign loans amounting to P0.22 billion.
The Treasury said these had offset the P5.24-billion revaluation in the peso value of debt denominated in other currencies, such as euro and Japanese yen.
The external debt of the national government as of end-May, however was 0.7 percent lower from P3.18 trillion recorded in the previous month but 1.8 percent higher than P3.1 trillion posted in December last year.
The total guaranteed obligations of the national government, meanwhile, dropped by 8.4 percent to P426.59 billion in May from P465.88 billion a year ago.
It also declined by 6.9 percent from P458.35 billion in December last year and shrank by 1.9 percent from P434.74 billion in the previous month.
The decline in guaranteed debt was attributed to net redemption of both local and foreign guaranteed obligations. Local currency exchange rate fluctuations also further lowered the peso value of external guaranteed debt by P1.76 billion and P0.18 billion, respectively. Domestic outstanding guaranteed debt settled at P233.01 billion, down by 3.2 percent from P240.8 billion in May 2020.
Likewise, it also fell by 8.4 percent from P254.42 billion as of end-2020 and by 2.3 percent from P238.53 billion as of end-April this year.
In terms of external guaranteed debt, it settled at P193.58 billion, a 14-percent contraction from P225.08 billion a year ago and 5.1 percent lower than the end-2020 level of P203.93 billion. It also slid by 1.3 percent from P196.21 billion as of end-April this year.
Rizal Commercial Banking Corporation (RCBC) economist Michael Ricafort said outstanding debt continued to rise on the back of increased government spending despite reduced revenue collections.
Ricafort also expects higher outstanding debt in the coming months due to increased government spending given the preparation for May 2022 elections and the need to purchase Covid-19 vaccines and booster shots.
Apart from this, he also pointed out that outstanding debt will further swell after the government recently borrowed $3 billion (about P145.7 billion) by issuing dual-tranche dollar-denominated global bonds.
“Further reopening of the economy especially if more Covid-19 vaccine doses arrive and [are] rolled out would help narrow the budget deficit and reduce the need for more borrowings with more tax revenue collections and less government spending on financial assistance under the various Covid-19 programs,” Ricafort said.
For this year, the national government has set a P3.1-trillion borrowing program.
Finance Secretary Carlos G. Dominguez III has said the country’s debt-to-GDP ratio this year is expected to reach 58.7 percent. This is below the 60-percent international threshold but higher than the country’s 14-year-high debt-to-GDP ratio last year at P54.6 percent.
Image courtesy of Nonie Reyes