It only took four months for the Philippine government to surpass the total amount it borrowed for the entire 2019.
Citing latest data from the Bureau of the Treasury, the Department of Finance (DOF) on Tuesday said the state has already borrowed P1.22 trillion as of end-April.
In 2019 the national government’s gross borrowing was at P1.02 trillion.
The new data already adjusted the net financing data to include the Bangko Sentral ng Pilipinas’ (BSP) purchase of P300-billion government securities under a repurchase agreement, with a maximum repayment period of six months.
Net of repayments to government’s creditors and bondholders for existing loans, the government’s financing increased by an additional P873 billion from end-2019 to April this year, the DOF said.
Eighty-one percent of the new borrowings or around P982 billion was sourced domestically through the sale of Treasury bills and Treasury bonds and through BSP’s P300-billion short-term loan.
The balance, amounting to around P237 billion or 19 percent of the total, was sourced externally through a mix of concessional foreign loans and bond issuances.
Since the state already borrowed P1.22 trillion as of end-April, Finance Secretary Carlos G. Dominguez III said the Duterte administration will be sticking to its position to limit state spending only to a “manageable and sustainable level” of 9-percent budget deficit.
Dominguez said the higher borrowings this year would be used by the Duterte administration to address the effects of its measures against the coronavirus disease 2019 (Covid-19) pandemic and the eruption of the Taal Volcano on the economy.
“None of us knows how long this pandemic will last. As we have borrowed a lot—P1.22 trillion in just four months, to be exact—fiscal space should be saved to afford us elbow room in case future circumstances require a new round of big health-care spending, subsidies and/or stimulus programs,” he said.
“Loans are not free money,” he added. “They are advances that we, or even our children and their children, will have to pay for in some way in the future. The Duterte administration’s policy is to be careful not to borrow beyond sustainable levels, lest we fall into a vicious cycle of accumulating unmanageable debt, which might drastically increase our financing costs, and plunge us deeper into debt.”
The economic team earlier reported that a target budget deficit of 9 percent, which takes into account the administration’s proposed stimulus measures, would place it at the median of the Philippines’ peer group.
In 2019 the country’s budget deficit was only at P660.2 billion or 3.4 percent of GDP.
Budget deficit occurs when the government expenditures exceed its revenues.
The government borrows to meet its spending requirements and to finance its budget deficit.
The country’s debt-to-GDP ratio is also seen to increase to 49.8 percent this year from 39.6 percent last year.
Despite the projected increase in the country’s debt-to-GDP ratio, economic managers had said this is still far lower than the most recent peak of 71.6 percent in 2004.