PANDEMIC LOANS SWELL GOVT DEBT TO P10.991T
THE national government’s (NG) total outstanding debt continued to swell to a fresh record-high in April this year, as the country resorts to more borrowings to finance its pandemic response.
The Bureau of the Treasury (BTR) reported on Thursday that the NG debt of the country rose to P10.991 trillion in end-april this year. This is up from the P10.77 trillion reported at the end of the year’s first quarter.
The BTR attributed the increase to the net availment of both local and external financing. Of the total debt stock, 28.9 percent was sourced externally while 71.1 percent are domestic borrowings.
Broken down, NG domestic debt amounted to P7.8 trillion, which is P67.78 billion or 0.9 percent higher compared to the end-march 2021.From the end-december 2020 level, meanwhile, NG domestic debt increased by P1.12 trillion or 16.7 percent.
The BTR attributed the rise in domestic debt primarily to the net issuance of government securities during the month.
On the other hand, NG external debt hit P3.2 trillion during the month, rising by P149.71 billion or 4.9 percent higher from the previous month’s level. From the end-december 2020 level, meanwhile, NG external debt has increased by P78.61 billion or 2.5 percent.
According to the BTR, the higher NG external debt reflected the government’s net availment of foreign loans amounting to P163.01 billion. This included P146.16 billion from the issuance of Global Bonds.
Further adjustments include the impact of third-currency appreciation against the US dollar which added P10.91 billion, while local-currency appreciation trimmed P24.21 billion.
The total NG guaranteed obligations, meanwhile, decreased by P1.07 billion or 0.2 percent from the previous month to P434.74 billion in April.
The lower level of guaranteed debt was attributed to the net redemption of both local and foreign guaranteed obligations amounting to P750 million and P80 million, respectively.
Local-currency exchange rate fluctuations also further lowered the peso value of external guaranteed debt by P1.57 billion, while third-currency appreciation added P1.33 billion to the peso value of guarantees.
Rizal Commercial Banking Corporation (RCBC) economist Michael Ricafort said the latest rise in NG debt was brought about by higher borrowings and reduced government tax revenues.
Ricafort also said the NG debt could still continue to rise in the coming months.
“Going forward, government debt could still go up in the coming months, in view of the recent borrowings by the government, both commercial and multilateral/official development assistance [ODA]; partly to finance the relatively wider budget deficit and the various Covid-19 programs, as well as additional government borrowings to finance the purchase of Covid-19 vaccines,” the economist said.
“For the coming months, the risk of the new coronavirus strains/variants that are more contagious and partly led to the record-high new Covid-19 local cases on a daily basis, as well as any delays in the Covid-19 vaccine arrivals and rollouts, could slow down economic recovery prospects worldwide and locally, thereby could lead to wider budget deficits; as slower economic recovery could lead to lower government/tax revenues and could lead to more government spending for any resulting increase Covid-19 programs [especially if there would be risks of more lockdown measures and travel restrictions],” he added.