The national government’s outstanding debt is seen to rise to the P8-trillion level by the end of 2020, government data showed.
However, the debt-to-gross domestic product (GDP) is seen to decline further by the end of the administration’s term.
According to the proposed Budget of Expenditures and Sources of Financing for next year, as posted in the Department of Budget and Management’s website, the outstanding debt of the national government is projected to reach P8.77 trillion by the end of 2020.
By the end of this year, the outstanding debt is seen to hit P7.85 trillion and this is expected to grow by 11.64 percent from end-2019 to the end of the succeeding year.
Of the said outstanding debt by end-2020, P5.77 trillion is seen to be accounted for by domestic loans while external debt will cover the remaining P3 trillion.
The estimates include the revaluation impact of the dollar-peso and third currency exchange rate movements.
In terms of the ratio of debt-to-GDP, the figure is seen to be flat at 41.4 percent for this year and next, as per the recent meeting of the Development Budget Coordination Committee (DBCC).
Previously, the Department of Finance (DOF) said the debt-to-GDP ratio was at 75 percent during the Arroyo administration and went down to around 55 percent during the Aquino administration. It continued to decline in 2018 at 41.9 percent under the Duterte administration.
The government expects the debt-to-GDP ratio to further decrease to around 39 percent by 2022.
“The (debt-to-GDP) is very low. Right now, it’s 41.9 percent, and it will be (around) 39 percent (by 2022), so it’s going down. No worries about debt because we are very careful. There is no problem with the debt because we are financing very good projects,” Gil Beltran, DOF undersecretary, told reporters at the Senate last week.
“If you borrow and you used the proceeds to have a feast, you should start worrying. But for this one, you have very good projects,” Beltran added.
The DBCC also said in its fiscal risks statement for 2020 the national government’s debt continued to be sustainable over the medium-term amid higher borrowing requirement.
“The debt sustainability analysis suggests a sustained downward trajectory of the debt-to-GDP ratio from 41.9 percent in 2018 to 38.5 percent in 2024 based on the baseline scenario,” the report said.
“Moreover, interest payments as a proportion of expenditures continue to decline resulting from the proactive and prudent management of government debt such as the liability management transactions concluded in the previous years. The decline in the debt service obligations suggests additional fiscal space for more productive spending,” it added.
The report also said the structure of the national government debt portfolio ensures that risks are minimized.
“The foreign currency-denominated debt continued to be peso-oriented due to heavy bias on domestic borrowing with the objective of reducing foreign exchange risks while supporting the development of the domestic bond market,” it stated.
The Bureau of the Treasury (BTr) reported Monday the national government’s outstanding debt as of end-July stood at P7.8 trillion, 10.8 percent up from its year ago level of P7.04 trillion.
It is however 0.8 percent lower than the previous month due to peso appreciation and domestic redemptions.
Of the total stock, 32.7 percent was sourced from external markets while 67.3 percent was borrowed locally.
Domestic debt amounted to P5.25 trillion, 14.1 percent up year-on-year but 0.8 percent down from the previous month’s level.
“The month-on-month decline in domestic debt reflects the net redemption of government securities amounting to P43.98 billion and P0.18 billion effect of peso appreciation on onshore dollar bonds,” the BTr said.
External debt stood at P2.55 trillion, 4.5 percent up year-on-year but 0.8 percent lower than the previous month.
“For July, the lower external debt was due to the combined effect of local and third-currency fluctuations which reduced the value of foreign debt by P18.49 billion and P3.34 billion, respectively.
These were tempered by the net availment of foreign loans amounting to P1.41 billion,” the BTr said.