The national government took on more loans in January, taking its debt above the 12 trillion peso mark for the first time, as the Philippines was mired in the protracted Covid-19 pandemic.
The Treasury Office reported Friday, March 4 that outstanding government debt stood at 12.03 trillion pesos in January 2022, up 16.5% or 1.7 trillion pesos from 10.327 trillion pesos in the same month last year.
According to the Treasury office, the increase was driven by more borrowing from local and foreign creditors.
Of the total outstanding debt, 69.6% was borrowed on the domestic market, while the remaining 30.4% were loans from abroad.
The treasury office said net borrowing caused domestic debt to rise 14.2 percent to 8.367 billion pesos from 7.325 billion pesos at the end of January 2021.
The government’s external debt also jumped 22% to 3,558 billion pesos from 3,001 billion pesos a year ago.
Based on Treasury data, the depreciation of the peso against the dollar from 48.076 to 51.135 led to the increase in foreign bonds.
Finance Secretary Carlos G. Dominguez III has acknowledged the more than two-year-old Covid-19 pandemic and its severe economic downturn has led to a significant increase in public debt.
Dominguez admitted that a high level of outstanding public debt, now equivalent to 60.5% of gross domestic product (GDP), is not sustainable and should only be temporary.
The Philippines’ debt-to-GDP ratio was slightly above the 60% threshold considered manageable for emerging markets.
For this reason, Dominguez said the next administration should focus on how the government will repay the debt that has accumulated throughout the pandemic.
On Thursday, the finance chief said the government’s urgent task of overcoming its pandemic-induced debt was “doable”.
President Duterte’s economic team has already formulated a program to limit the budget deficit and improve the debt-to-GDP ratio. Dominguez said that part of the fiscal consolidation plan they will hand over to the next administration.
“We are ready to brief all presidential candidates and their economic teams, and we will present them with ideas on how to manage the growing debt,” Dominguez said.
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