Gov’t debt at new high, nearing P14T

MANILA  -The Philippine national government debt’s stock increased by 0.8 percent or an additional P104.1 billion to reach yet another record high of P13.86 trillion at the end of March, according to the Bureau of the Treasury (BTr).

The BTr reported that outstanding obligations both to domestic and foreign lenders increased in March as new borrowings had exceeded payments made that month.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the net borrowings posted could have reflected the need to finance the relatively wider budget deficits in recent months.

Ricafort said the further increase in debt stock was also partly due to the lower individual tax rates for most income brackets, implemented since the start of 2023 under the Tax Reform for Acceleration and Inclusion or Train Law.

He said this had reduced government revenues while high inflation basically increased government expenditures. There were also the higher interest rates that added to the government’s debt servicing costs.

“For the coming months, a new record high for the outstanding national government in peso terms is still possible, in view of the upcoming US dollar-denominated or euro-denominated retail bond issuance (scheduled in this second quarter of 2023),” Ricafort said.

Also in March, Finance Secretary Benjamin Diokno said the government was looking at offering $2 billion to $3 billion in retail Treasury bonds (RTBs), adding that they were also mulling over the issuance of RTBs denominated in euros.

Data at the BTr show that, in March, local debt rose by 0.8 percent or P71 billion to P9.51 trillion mainly because the government’s new borrowings were more than the payments made that month.

Similarly, foreign debt increased by 0.8 percent or P33.1 billion to P4.34 trillion.

These increases due to net borrowings outweighed the benefit of the Philippine peso’s appreciation against the US dollar, which trimmed a total of P71.5 billion off the debt stock.

As of the end of 2022, the debt stock represented 60.9 percent of gross domestic product. This increased from 60.4 percent at end-2021 and still beyond the 60-percent threshold that is internationally considered as the cap for a prudent debt level.

– Ronnel W. Domingo

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