By CHINO S. LEYCO
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 P8.89 trillion as of May, up by 12 percent, or roughly P975.2 billion, from P7.915 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 P1.159 trillion.
Based on the Treasury data, 68 percent of government debt, equivalent to P6.034 trillion, are held by domestic creditors, while the remaining balance of 32 percent, or P2.856 trillion, are in the overseas markets.
At end-May, local debt increased in 15 percent from P5.256 trillion in the previous year, while offshore obligations jumped by 7.4 percent from P2.659 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 P114.01 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 P50.58 per dollar in May, stronger compared with P52.22 in the same month in 2019.
The appreciation of the local currency resulted in P7.65 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 P9.6 trillion.
The Department of Finance had said the government needs to borrow to cushion the impact of the coronavirus-induced crisis that affected not only the Philippines, but all other countries in the world.
Before the COVID-19 struck, the government’s debt ratio was at a comfortable level of 39.6 percent.