Philippines: Debt hits record-high P13.9 trillion in March

MANILA, Philippines — The country’s outstanding debt increased to P13.86 trillion in March, hitting a fresh new high yet again, with the Marcos administration already adding over P1 trillion since it took office.

Latest data from the Bureau of the Treasury showed that the national debt reached P13.86 trillion by end-March, up by 0.8 percent from the P13.75 trillion level the month prior as the government continued to borrow here and abroad to fund the budget deficit.

On a yearly basis, however, the debt stock picked up by 9.3 percent from P12.68 trillion.

For March alone, the government added some P104.15 billion in fresh obligations due to the net issuance of domestic and external debt.

With this, the running debt incurred by the Marcos administration effectively breached the P1 trillion level at P1.06 trillion in just nine months.

The current debt pile is now about 94.7 percent of the expected P14.63 trillion debt by end-2023.

Leonardo Lanzona, economist and professor at the Ateneo de Manila University, said the increasing debt is an indication that the economy is not growing as fast as expected.

“When this administration started about a year ago, it inherited a huge debt from the previous administration. The mantra of the economic managers was, ‘we will outgrow the debt, ’ ” Lanzona told The STAR.

“Unfortunately, this did not happen. The increased interest rate programs of the central bank, given the lack of any supply-side inflation plan, further stifled this growth,” he said.

Lanzona said the government may exceed its debt expectation this year given the current borrowing trend.

However, he said that this should not be seen as a barrier to growth if the government does its job of undertaking economic reforms that allows vital sectors like industry and agriculture to grow.

Union Bank of the Philippines chief economist Ruben Carlo Asuncion, for his part, argued that it should be a top priority for the government to monitor the debt stock and make sure it is sustainable and manageable.

As the trend of the debt level suggests an upward momentum, Asuncion said that the idea of new taxes should already be taken into consideration to generate more revenues.

“The question of additional taxes will have to be dealt with soon, as recent tax collections have started to decline amid the reopening narrative impact on revenue uptake starts to fade,” Asuncion told The STAR.

Lanzona, on the other hand, said the government seemed to have reverted to an austerity program as part of its strategy to quell inflation, as addressing the high prices of commodities was more of a concern than debt servicing.

Meanwhile, the Treasury said the majority or 68.7 percent of the debt pile were domestic borrowings and the remaining 31.3 percent were sourced externally.

Total domestic debt at P9.51 trillion inched up 0.8 percent on a monthly basis, but jumped by 7.3 percent from the P8.87 trillion in March 2022.

The P72.87 billion net issuance of domestic securities outweighed the P1.87 billion effect of local currency appreciation against the dollar on onshore foreign currency-denominated securities.

External obligations, on the other hand, also slightly increased by 0.8 percent to P4.34-trillion month-on-month. It rose 14 percent from P3.81 trillion on a yearly basis.

The Treasury said the increment in external debt was due to the P84.26 billion net repayment availment of foreign loans, as well as the P18.53 billion impact of third-currency adjustments against the dollar.

These more than offset the effect of local currency appreciation against the US dollar, which amounted to P69.64 billion.

Meanwhile, total debt guaranteed obligations went down by 0.8 percent to P384.12 billion due to the net repayment of both domestic and foreign guarantees amounting to P10 million and P1.52 billion, respectively.

Source: https://www.philstar.com/business/2023/05/09/2264798/debt-hits-record-high-p139-trillion-march