Nat’l debt piles up to record P12.79 T

The Duterte administration stepped out of office with a recordhigh P12.79 trillion in debt amid its ramped up borrowings to address the economic and social impacts of the pandemic, effectively putting the Marcos government in a much tighter fiscal spot.

Latest data from the Bureau of the Treasury showed that the national debt went up to its highest level to date at P12.79 trillion as of end-June.

This was 2.4 percent higher than the P12.5-trillion debt recorded a month earlier and was 14.6 percent larger than the P11.17 trillion in obligations on a yearly basis.

This is the debt stock that the Marcos administration has inherited from former president Rodrigo Duterte, making it more difficult for the new leadership to address its fiscal space.

The current debt pile is more than double the P5.9 trillion in debt that the Aquino administration left in June 2016.

The country’s financial obligations started to pick up significantly in 2020 when the COVID pandemic hit.

The debt stock soared in the past two years as government revenues dipped due to the economic downturn as businesses and activities were halted following mobility restrictions.

Data showed that additional debt incurred by the government since the pandemic reached over P5 trillion – P2 trillion each for 2020 and 2021 and another P1.06 trillion for the first half of the year.

The Treasury said the debt portfolio climbed in June due to the net issuances of domestic and external loans as well as currency adjustments.

ING Bank senior economist Nicholas Mapa said the sizable buildup in debt was partly due to the economic recession induced by the pandemic.

However, Mapa said the current debt-to-GDP ratio at 63.5 percent is above the internationally accepted threshold of 60 percent and has been above this level for more than a year.

“This leads to a fiscal handicap in that the current administration will need to navigate the recovery with tight fiscal space amid the threat of a credit rating downgrade,” Mapa said.

“This limits their ability to utilize fiscal muscle to stimulate growth unless fresh revenues are generated,” he noted.