COVID-19 raises gov’t debt to ₱9 trillion in May
The country’s response to coronavirus crisis continues to push the national government’s debt stock as the Bureau of the Treasury reports its total obligations to creditors jumped by nearly a trillion pesos in May this year.
The total outstanding debt of the national government stood at ₱8.89 trillion as of May, up by 12 percent, or roughly ₱975.2 billion, from ₱7.915 trillion in the same month last year, the Treasury data showed yesterday.
According to the bureau, the increase was due to the national government’s higher reliance on borrowings from both local and foreign banks to bridge the gap between its expenditures and revenues.
The Treasury explained the government needed to raise its borrowings after the Duterte administration saw a significant reduction in revenue collections as the coronavirus pandemic continues to drag down the local economy.
Since January this year, the entire sovereign debt has already risen by ₱1.159 trillion.
Based on the Treasury data, 68 percent of government debt, equivalent to ₱6.034 trillion, are held by domestic creditors, while the remaining balance of 32 percent, or ₱2.856 trillion, are in the overseas markets.
At end-May, local debt increased in 15 percent from ₱5.256 trillion in the previous year, while offshore obligations jumped by 7.4 percent from ₱2.659 trillion.
The higher local debt was “due to the net issuance of domestic government securities,” while for the foreign, it was attributable to “availment of external loans amounted to ₱114.01 billion as part of continued government efforts to secure financing for the COVID-19 response.”
Meanwhile, the stronger peso against the US dollar helped the national government to somehow lower its foreign debt portfolio.
Based on the Treasury monitoring, the peso averaged ₱50.58 per dollar in May, stronger compared with ₱52.22 in the same month in 2019.
The appreciation of the local currency resulted in ₱7.65 billion reduction in the peso value of its foreign currency denominated loans.
In May, President Duterte’s economic managers estimated that the national government’s debt could hit by 49.8 percent of the country’s economy by the end of this year, equivalent to ₱9.6 trillion.