General gov’t debt rises to 36.4% of GDP at mid-2017

GENERAL government (GG) debt as share of the economy inched higher at the end of June 2017, the Finance department said yesterday.

The Department of Finance reported that the general government debt-to-gross domestic product (GDP) ratio slightly rose to 36.4% as of end-June 2017 from 35.3% a year earlier.

GG debt consolidates the outstanding debt of the national government (NG), local government units (LGUs), the Central Bank Board of Liquidators and social security institutions (SSIs), less that held by the Bond Sinking Fund (BSF).

According to the report, the debt share rose as “the debt ratios reflected the increase in programmed borrowings” since NG expenditures picked up last year resulting in a higher deficit.

NG debt, net of BSF, rose to P5.8 trillion, up 10.3% from a year earlier.

“Because the BSF can only invest in government securities, and these holdings are considered intrasectoral and netted from total outstanding NG debt, the decline in BSF holdings, combined with peso depreciation, led to higher outstanding NG debt for the period,” the report added.

Debt owed to domestic creditors was P3.331 trillion at the end of last year’s second quarter, representing 61% of the total. Foreign borrowing, on the other hand, amounted to P2.166 trillion.

The national government intends to maintain an 80:20 financing mix, in favor of domestic lenders.

LGU debt climbed 9.2% to P85.8 billion in end-June from the P78.6 billion recorded in the same period in 2016. Holdings of government securities by social security institutions reclined by P59.7 billion, far outweighing LGU loans held by the Municipal Development Fund Office, which rose by P3.5 billion. —