THE country’s outstanding debt hit a new record-high of P13.86 trillion as of March after posting additional P104.15 billion in obligations from domestic and foreign sources, the Treasury bureau said on Monday.
As of first quarter, the debt pile is 95 percent of the expected P14.63-trillion debt by end-2023, it added.
According to Michael Enriquez, president of Sun Life Investment Management and Trust Corp., the increase in government debt was expected by the market as the government continues to spend on infrastructure projects.
“Debt-to-GDP [gross domestic product] continues to be within the expected level announced by the government,” he noted.
Recently, Finance Secretary Benjamin Diokno projected a possible 7-percent economic growth in the first quarter of 2023, as the government and the private sector continued to ramp up infrastructure activities in the recovery phase from the pandemic. This ramping up was expected to increase the government’s indebtedness.
Aligned with fiscal plan
Domini Velasquez, chief economist at China Banking Corp., said that the government debt is still aligned with the fiscal program. Slow and offsetting growth rates in revenues and expenditures have kept the deficit, and consequently resulting debt, in check.
“However, to be prudent, the government should fast-track revenue-generating measures to aptly finance planned expenditures, particularly its infrastructure program, without resorting to large accumulation of debt,” she added.
“These measures include administrative efforts, digitization among revenue agencies, and planned revenue-enhancing legislation such as PIFITA [the Passive Income and Financial Intermediary Taxation Act], tax on single-use plastic, digital tax, revision of the motor vehicle users charge, and sweetened beverage tax, among others. These will help clip both the deficit and debt of the government,” Velasquez said.
For his part, Michael Ricafort, chief economist of Rizal Commercial Banking Corp. said that the government debt could still go up, especially if government borrowings are frontloaded again at the early part of 2023 to finance the budget deficit, starting with the scheduled foreign borrowings in the first half of 2023.
“Also partly to hedge government borrowings in view of the still rising trend in global short-term interest rates,” he added.
In February, the government’s total outstanding debt reached P13.75 trillion, higher by 0.4 percent compared to the previous month, the Treasury said.
Out of the total debt stock, 31.3 percent was sourced externally while 68.7 percent were domestic borrowings, it added.
Moreover, domestic debt amounted to P9.44 trillion, higher by 0.6 percent in January, data showed.
Data showed that foreign debt reached P4.31 trillion or 0.1 percent lower than the previous month, records showed.
The slight decline in external debt was due to the net repayment of foreign loans and the impact of third-currency adjustments against the dollar, which outweighed the effect of local currency depreciation, the Treasury said.