MANILA, Philippines — Borrowings of the Duterte government to finance a costly pandemic fightback continued to translate to more debts in May when liabilities ballooned to nearly P9 trillion.
Obligations rose 3.4% month-on-month in end-May to a new record-high of P8.89 trillion, the Bureau of the Treasury reported on Tuesday. Since the start of the year, debt accumulated faster by 15%.
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Broken down, both domestic and external debts rose on a monthly basis, although the latter increased faster than the former. That said, peso continued to account for the bulk of liabilities, holding 67.9% share, while the balance of 32.1% were held by their foreign counterparts.
“The P290.44 billion or 3.4% increment from the end-April level was primarily due to the increased reliance on government securities issuance and external loan availments to fund COVID-19 response amid a sharp drop in revenue collections,” the Treasury said in a statement.
Revenues plunged 16.1% in the first five months as businesses were shuttered and consumers pulled back from spending during the pandemic. The dismal tax take forced the government to turn to more borrowings and raise cash for programs meant to counter the effects of coronavirus disease-2019 (COVID-19).
Those borrowings have slowly trickled in at the height of borrowings in April but persisted in May and have started showing in government books. For instance, peso debts went up 2.9% month-on-month to P6.03 trillion, figures showed.
The increase was mainly a result of a 3.1% uptick in Treasury bonds and bills issued during the period amounting to P2.86 trillion, which was partially offset by some debt payments.
T-bonds and T-bills were sold every week by the government to generate funds. The securities allow their holders to gain interest paid by the government for lending their money. In terms of maturities, T-bonds have longer payment terms than T-bills which are only payable within three, six or 12 months.
Apart from bond issuances, the government and its agencies also loaned some funds amounting to P300.95 billion, unchanged from April. A huge part of these loans represented the central bank’s P300-billion cash infusion last March coursed through purchases of Treasury securities. The amount is payable within three months, but can be renewed for another quarter.
However, the larger increase of 4.4% from previous month was recorded by foreign obligations which reached P2.86 trillion in end-May. Treasury said a total of P114.01 billion in loans were credited last month, increasing external liabilities.
In addition, a slightly weaker peso made existing debts more expensive by P7.65 billion from their level in April, data showed. The peso averaged P50.585 to a dollar last month against the P50.444 used in April to compute for the value of debt.
Breaching the P9-trillion mark is already inevitable. The Duterte administration signed up for $7.18 billion in foreign loans and bonds as of June 25. Of the total amount, Finance Secretary Carlos Dominguez III had said $2.26 billion had been credited and were already spent for COVID-19 response.
The budget deficit, which indicates the government spends beyond its means, is also expected to peak to P1.612 trillion this year, which will only be bridged by more borrowings.