The Philippines has recorded P12.68 trillion in outstanding debt as of end-March this year, compared to the P12.09 trillion recorded in the previous month, the Bureau of Treasury said Thursday.
Out of the total, 30.1 percent was sourced externally, while 69.9 percent were from domestic borrowings, the BTr said in a statement.
Domestic debt reached P8.87 trillion, higher by 5.4 percent compared to February.
External debt was at P3.81 trillion for the month, or 3.6 percent higher compared to the previous month, the agency said.
Meanwhile, Malacanang gave assurances the country’s borrowings would be put to good use, particularly to fund country’s fight against the prevailing COVID-19 pandemic.
Acting presidential spokesperson and Communications Secretary Martin Andanar made this remark after the Bureau of the Treasury reported that state liabilities were up 4.8 percent or P586.29 billion higher than the debt recorded in the previous month.
“We assure our people that the country’s borrowings, which put the county’s outstanding debt to more than P12-T, as end of March 2022, shall be put into good use and utilized effectively and efficiently,” Andanar said.
He said borrowings were necessary to drive economic growth and ensure immediate funding for emergencies like the pandemic.
“Recent borrowings would be for our COVID-19 response and recovery and resiliency efforts. We need to sustain our country’s long-term socioeconomic growth and development,” he added.
Since assuming power in the latter half of 2016, President Rodrigo Duterte had more than doubled the country’s debt from just P5.95 trillion at the end of June 2016.
The country has been borrowing heavily in the last few years due to its COVID-19 response and recovery efforts, and the administration’s infrastructure program launched prior to the pandemic.
Recent borrowings brought debt-to-GDP ratio to 60.5 percent in 2021 from 39.6 percent before the COVID-19 pandemic. But economic managers have argued that the current debt level remains manageable.
Michael Ricafort, chief economist at RCBC, said that in the coming months, the government’s outstanding debt could still reach new record highs in view of additional government borrowings, especially to frontload the borrowing requirements before the elections.
The weak peso-dollar exchange rate, among the weakest in 2.5 years or since August 2019, also partly increased the peso equivalent of the government’s foreign debts, he said.
Ricafort added that interest payments for new borrowings could also rise as central banks around the world raise interest rates, with local/US/global long-term interest rates at new pre-pandemic highs.
But he also said that measures to further re-open the economy towards greater normalcy would help narrow the country’s budget deficit and help also temper the growth in the government’s debt stock.
Last month, Duterte justified the country’s debt increase noting that the government had been forced to borrow money due to a lack of fund sources.
He said there was nothing wrong with borrowing money, so long as there were no irregularities in government spending.
Duterte even enjoined local governments to borrow money but reminded them to make sure that would not be used for corrupt activities.
Finance Secretary Carlos Dominguez III said the volume of borrowings accumulated due to the pandemic is understandable given the need to boost financing amidst the drop in revenues because of the lockdowns.
He said the next administration would have to design policies and stick to very strict fiscal discipline to grow out of debt.
Data from the BTr showed that the government’s running debt was 69.9 percent sourced locally and 30.1 percent sourced externally.
The BTr said the significant jump in total debt portfolio was primarily driven by higher borrowings, through the sale of government securities, to both local and foreign creditors.