Government debt stock fattens in October — Treasury

MANILA, Philippines — The national government’s debt stock increased in October and has already exceeded the expected pile by the end of the year, as the Marcos Jr. administration took on new debts to finance its programs.

The Bureau of the Treasury revealed Wednesday that government liabilities hit P13.64 trillion in October, inching up 0.92% month-on-month. Of the outstanding debt load, domestic borrowings accounted for 65.58% while the rest came from external creditors.

The debt pile's ascent was mainly due to the issuance of government securities. Since the beginning of the year, debts have piled up by 16.31% or P1.91 trillion.

Experts have been warning about the impact of a growing debt pile for the Philippines. The state’s debt stock climbed at the onset of the pandemic, due in part to the Duterte administration’s borrowing spree to fund its pandemic response.

A fat debt stock would mean more taxpayers' funds are needed for debt servicing in the coming years. The situation also means that the Marcos Jr. administration would run the government and institute reforms with a very tight fiscal space.

By the end of 2021, state liabilities already accounted for 60.5% of the country’s gross domestic product, the highest ratio since 2005 and breaching the 60% threshold deemed manageable for emerging market economies.

Outstanding debt is expected to rise to P13.43 trillion by the end of 2022.

Broken down, domestic borrowings rose 0.59% month-on-month to P9.36 trillion. The government issued P55.83 billion in securities amid the peso’s appreciation paring the stock by P1.25 billion.

External debt grew 1.64% on a monthly basis to P4.28 trillion in October. Likewise, the peso’s appreciation and third-currency fluctuations offset the increase, which amounted to P43.07 billion and P6.3 billion. Since the start of the year, external debt bloated 20.45% or P727.65 billion.

“With the country still running a deficit, we can expect the debt level to rise,” said Nicholas Antonio Mapa, senior economist at ING Bank in Manila.

“What is important is that we outgrow our debt so that the overall debt to gross domestic product ratio can fall,” he added.