NG debt-to-GDP jumps to 54.5%

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    The national government’s debt-to-gross domestic product (GDP) ratio rose to 54.5 percent in 2020, amid higher funding requirements to address the challenges brought by the coronavirus disease 2019 (COVID-19) pandemic.

    The Bureau of the Treasury (BTr) said in a statement yesterday relative to the GDP, disruptions caused by the COVID-19 pandemic brought up the debt-to-GDP ratio last year from 39.6 percent at end-2019.

    “This resulted from the higher financing requirement to address the pandemic alongside a 9.5 percent contraction in the economy for the year,” the BTr said.

    In nominal terms, the national government’s total outstanding debt stood at P9.8 trillion as of end-2020, up by 26.7 percent or more than P2 trillion from the end-2019 level of P7.73 trillion.

    The national government debt as of December however posted a 3.3 percent decline from the end-November level of P10.13 trillion primarily due to net redemptions of domestic loans.

    Accordingly, the share of domestic debt relative to the total debt stock increased to 68.35 percent from 66.32 percent a year ago, as the government continued its reliance on domestic borrowing to meet its financing needs, the BTr said.

    The national government’s domestic debt amounted to P6.69 trillion, 6.9 percent lower compared to the end-November level of P7.19 trillion, primarily due to the repayment of the P540 billion provisional advances from the Bangko Sentral ng Pilipinas.

    However, from the end-2019 figure of P5.13 trillion, domestic debt has increased by 30.6 percent.

    Meanwhile, the national government’s external debt of P3.1 trillion increased by 19.1 percent from the P2.6 trillion posted as of end-2019, and was also 5.4 percent higher from the previous month’s level of P2.94 trillion.

    “For December, net foreign loan availment amounted to P151.43 billion including the newly issued ROP Bonds amounting to P132.06 billion as part of continued government measures to raise funds for budgetary support while the appreciation in third-currency denominated debt added P10.67 billion to the peso value of external obligations,” the BTr said.

    On the other hand, the BTr said peso appreciation trimmed P3.91 billion.

    “Our gross borrowings will reach P3.03 trillion in 2021, roughly equivalent to our funding outturn in 2020. We expect the national government’s debt to settle at 57 percent of GDP this year,” Carlos Dominguez, Department of Finance secretary, said in mid-January.

    “Even with the upscaling of our borrowing plan, we will still be able to keep our debt ratio within a sustainable threshold. This gives us the advantage over economies who were already saddled with heavy debt prior to the crisis,” Dominguez said.

    Since none of the emergency spending for the health crisis was programmed, the government needed to bridge the budget gap with additional borrowings.

    Dominguez however earlier said the debt-to-GDP ratio for 2020 was “well within the prescribed bounds of fiscal viability.” The country earned an unprecedented upgrade in credit rating, which resulted in tighter spreads and concessional rates for borrowings.

    The finance chief said the government has set out a clear strategy for financing the deficit, by prioritized domestic borrowings followed by official development assistance and the international capital markets.

    “We determined this plan as the most prudent approach, ensuring sustainability in our debt service,” Dominguez said.