Philippine government current debt stock hits new high and nears 12 trillion pesos thanks to increased borrowing to boost state coffers amid COVID pandemic -19, according to data released Wednesday by the Treasury Office (BTr) shows.
The national government debt stock reached a new record high of 11.97 trillion pesos at the end of October 2021, up 19.38% from 10,027 trillion pesos during the same period in 2020. pic.twitter.com/b5ItdWlz4z
– Ted Cordero (@Ted_Cordero) December 1, 2021
At the end of October of this year, the national government debt stock reached 11.97.7 trillion pesos, up 19.38% from the 10.027 billion pesos at the end of October 2020.
The debt level at the end of October 2021 is also 0.46% higher than the outstanding debt at the end of September 2021 of 11.917 trillion pesos.
Since the beginning of the year, the total current debt balance has increased by 2.2 trillion pesos or 22.22%.
The Treasury attributed the increase in debt “to the net issuance of national securities”.
The total outstanding debt consists mainly of domestic borrowing at 70.7%, while the remaining 29.3% came from abroad.
Finance Secretary Carlos Dominguez III had previously defended the country’s scheduled rise in debt, which is expected to reach the internationally recommended threshold of 60% of gross domestic product by 2022.
âI would like to stress again that the increase in our debt level is only temporary. This was not the result of disproportionate public spending, but rather the result of a universal shock that worsened the financial situation of almost every country in the world, âDominguez said during a House budget deliberation on the draft. national budget of 5,024 trillion pesos for 2022.
By the end of September of this year, the amount of the country’s outstanding debt relative to the size of the economy had already exceeded the internationally accepted debt threshold.
BTr data showed that the country’s debt-to-gross domestic product (GDP) ratio had risen to 63.1% by the end of September 2021, as the national government debt stock reached 11.917 trillion. pesos during the period.
This is the highest debt-to-GDP ratio in 16 years, when the stock of debt as a percentage of the economy reached 65.7% in 2005.
Debt / GDP ratio
Senatorial Minority Leader Franklin Drilon has raised concerns about the high 16-year debt-to-GDP ratio as it “has already passed the threshold that is accepted as [adequate] ability of the economy to repay its debts.
In response, the Chairman of the Senate Finance Committee, Senator Sonny Angara, defending the 2022 draft budget, said that “in normal times it is 60% debt as a percentage of GDP …”
ââ¦ But in abnormal times like now, the IMF (International Monetary Fund) revised this figure to 70%. Most countries are now over their projected deficit levels. “
In particular, the government’s domestic debt stood at 8,470 billion pesos, up 0.96% from the level of 8,400 billion pesos at the end of September 2021 “due to the net issuance of government securities. “.
Since the start of the year, local debt has increased by 1.77 trillion pesos or 26.49%.
External borrowing, meanwhile, amounted to 3.5 trillion pesos, down 0.74% from the end-September 2021 level of 3.530 billion pesos due to the impact of interest rate adjustments. local and foreign exchange amounting to 22.68 billion pesos and 8.45 billion pesos, respectively, according to the Treasury.
The BTr noted that the Philippine peso has appreciated against the US dollar, going from 50.879 pesos: $ 1 at the end of September 2021 to 50.552: $ 1 at the end of October 2021.
He said the exchange rate adjustments more than offset the net use of foreign bonds amounting to 4.96 billion pesos.
Since the start of the year, foreign borrowing has increased by 402.81 billion pesos or 12.99%.
Budget consolidation plan
The Department of Finance (DOF) is pursuing a budget consolidation plan aimed at minimizing the long-term economic scars resulting from the recession induced by the COVID-19 pandemic.
However, within a year of the resignation of the Duterte administration, the budget consolidation plan must be implemented by the next administration.
Fiscal consolidation refers to government policies aimed at reducing deficits and debt accumulation.
âLoss of tax revenue due to the pandemic-induced economic crisis, the increase in debt to fund our response to COVID-19, the imminent impact on revenues of our economic stimulus measures and the decline in expenditure efficiency following the Supreme Court decision to increase the share of LGUs (local government units) of the NTA (National Tax Allotment) must be properly supported by the economic team of the next administration, âDominguez said. – RSJ, GMA News