Philippines debt to hit P13 trillion next year

MANILA, Philippines — The country’s outstanding debt will surpass the P13 trillion mark next year, forcing the government to slow its borrowings from local and foreign financiers by nearly 20 percent, the Bureau of the Treasury said.

The BTr said the country’s debt stock will balloon by over 14 percent to an all-time high of P13.41 trillion in 2022 from P11.73 trillion this year.

The bulk or around 70 percent of the amount will be owed to domestic lenders at P9.4 trillion, while the remaining 30 percent will come from foreign financiers at P4.01 trillion.

As such, the government intends to moderate its borrowings for next year in an effort to manage its finances in what is looking like a protracted fight against COVID-19. In 2022, the government plans to cut its borrowing program by close to 20 percent to P2.47 trillion from P3.07 trillion.

Overall, gross domestic borrowings will be slashed by at least 23 percent to P1.91 trillion. To do this, the government will lessen the issuance of fixed-rate Treasury bonds to P1.86 trillion from P1.9 trillion.

Similarly, gross external borrowings will be decreased by roughly four percent to P560.57 billion as the decline in program loans will offset the increase in project loans and bonds, and other inflows.

On the other hand, debt service will go up by a little less than one percent to P1.29 trillion from P1.28 trillion on upward spending in paying the principal for borrowings made here and abroad.

Amortization will comprise close to 61 percent of the debt service at P785.2 billion, while interest payments will make up the remaining 39 percent at P512.58 billion.

Further, bulk of the debt compliance at P1.04 trillion will be paid to local sources, while P253.81 billion will be remitted to foreign creditors. Finance Secretary Carlos Dominguez III in July said the debt service for 2022 should translate to 5.9 percent of gross domestic product (GDP) and will balloon to 6.6 percent in 2023 and seven percent in 2024.

Dominguez also said the debt-to-GDP ratio will breach the international recommendation of 60 percent next year, at 60.8 percent. Finance Undersecretary and chief economist Gil Beltran said the Philippines will only return to below 60 percent by 2025.