Philippines debt hits record P11 trillion

MANILA, Philippines — The country’s total debt stock hit a new record high in May, passing the P11-trillion mark as the government borrowed more from the domestic market to finance its pandemic response.

The Bureau of the Treasury yesterday said total outstanding debt jumped to an all-time high of P11.07 trillion, adding P2.18 trillion or close to 25 percent from P8.89 trillion in end-May last year.

Domestic borrowing made up more than 71 percent of total debt as it jumped by nearly a third to P7.91 trillion from P6.03 trillion a year earlier.

The state taps the domestic debt market through the issuance of government securities such as Treasury bills and bonds.

Foreign debt comprised the remaining 28 percent of outstanding debt as of end-May. From P2.85 trillion a year ago, foreign borrowings went up by 11 percent to P3.15 trillion.

Broken down, debt papers issued by the government accounted for more than 93 percent of the domestic debt at P7.37 trillion. Bonds of various denominations took up over half of the external borrowings at P1.78 trillion.

Loans availed of by the government to finance its programs and projects made up the remaining 43 percent of foreign debt at P1.36 trillion.

The Treasury also reported guaranteed debt incurred by the government reached P426.59 billion as of end-May, eight percent lower than the P465.87 billion level during the same period in 2020.

“The lower level of guaranteed debt was due to the net redemption of both the local and foreign guaranteed obligations amounting to P5.52 billion and P0.69 billion, respectively,” the Treasury said in a statement.

Maria Ella Oplas, an economist from De La Salle University, said authorities must now disclose every amount it borrows and spends with the volume of total debt reaching over P11 trillion. She said outstanding debt would balloon further as the COVID virus has yet to be contained.

“Debt is necessary right now most especially if we want every single Filipino vaccinated. We are in a situation where we don’t have options but to borrow money,” Oplas told The STAR.

“The key, of course, is how we account the money to make sure that the borrowing is not put in vain,” she said.

The government intends to borrow a total of P3.02 trillion this year to speed up the recovery of the economy. The bulk of the borrowing will be from local sources at P2.58 trillion, while another P442.36 billion will be requested from foreign lenders.