Government debt balloons by 10.4% to P8.6 trillion as of end-April

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THE national government’s outstanding debt ballooned by 10.4 percent to P8.6 trillion as of end-April this year from P7.787 trillion in the same period in 2019.

Latest data from the Bureau of the Treasury also showed that the end-April figure surged by P122.89 billion or 1.5 percent from P8.477 trillion as of end-March this year due to domestic securities issuance and external loan availments.

The end-March figure was adjusted to reflect the P300-billion short-term borrowing through the repurchase agreement with the Bangko Sentral ng Pilipinas (BSP).

To date, the national government outstanding debt grew by 11.2 percent for the first four months of the year from P7.731 trillion in December last year, driven by the 5.1-percent increase in external debt and the 14.4-percent uptick in domestic liabilities.

Of the total outstanding debt stock, 67 percent represented domestic debt, while 33 percent was sourced externally.

Domestic debt as of end-April reached P5.864 trillion, a 12.6-percent jump from P5.2 trillion a year ago.

Month-on-month, this was also higher by 0.9 percent compared to P5.813 trillion as of end-March.

For April, net issuance of domestic government securities amounted to P50.82 billion, while the peso appreciation merely diminished the value of onshore dollar bonds by P0.17 billion.

To date, domestic debt has increased by P735.92 billion or 14.4 percent since the beginning of the year as a result of net debt issuance and the short-term borrowing from BSP.

On the other hand, external debt from January to April this year rose by 6 percent to P2.737 trillion from P2.581 trillion in the same period in 2019.

Compared to P2.665 trillion as of end-March, this is up by 2.7 percent.

From the start of the year, the external debt of the national government increased by 5.1 percent from P2.604 trillion as of end-December last year.

Net availment of external loans for April amounted to P87.34 billion as part of the government’s efforts to raise concessional financing to address the Covid-19 pandemic.

Meanwhile, currency adjustments trimmed P15.10 billion from total, particularly through local currency appreciation.

Total outstanding guaranteed debt also decreased by 1.1 percent to P477.682 billion from P482.982 billion a year ago.

As of end-April this year, the guaranteed obligations slid by 0.9 percent from P481.82 billion as of end-March.

The lower level of guarantees was due to the net redemption of both local and foreign guarantees amounting to P3.24 billion and P0.10 billion, respectively.

This was further trimmed by currency adjustments which reduced the value of external guarantees by P0.80 billion.

Since the beginning of the year, national government guarantees have been reduced by P11.06 billion (or 2.3 percent) from P488.746 billion as of end-December last year.

Prior to the onset of the Covid-19 pandemic, the government had set a P1.4-trillion borrowing program for this year.

The Cabinet-level Development Budget Coordination Committee (DBCC) earlier said it projects this year’s deficit to widen to P1.56 trillion or 8.1 percent of GDP on the back of increased disbursements and drop in revenue collections as the country continues to take a hit from the pandemic.

Acting Socioeconomic Planning Secretary Karl Kendrick Chua earlier said the Executive Branch’s proposed P173-billion fiscal stimulus program—Bayanihan II and the outright 5-percent cut of the current corporate income tax rate from 30 percent to 25 percent under the Corporate Recovery and Tax Incentives for Enterprises Act or CREATE—will push the country’s budget deficit to 9 percent of GDP this year.

In 2019 the government recorded a budget deficit of P660.2 billion or 3.55 percent of GDP, exceeding the administration’s target of 3.25 percent of GDP for the year.

The DBCC also said last month that the country’s debt-to-GDP ratio this year will be around 50 percent, far lower than the most recent peak of 71.6 percent in 2004.

Last year, the country enjoyed its lowest-recorded debt-to-GDP ratio of 39.6 percent of GDP.

A budget deficit occurs when expenditures exceed revenues, while debt-to-GDP ratio is used to gauge a country’s ability to pay off its debt.

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