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Nat’l gov’t debt stock balloons to record P10.327T as of end-January

The national government’s running debt balance ballooned to a new record-high of P10.327 trillion as of end-January 2021 as the government continued to ramp up its borrowing efforts to fund its initiatives to address the COVID-19 pandemic, data released by the Bureau of the Treasury (BTr) showed Tuesday.

The end-January 2021 outstanding debt is 5.4% higher than the end-December 2020 level of P9.795 trillion.

It is also 33% higher than the end-January 2020 level of P7.763 trillion.

“The level of national government debt reflects a P532.46 billion or 5.4% increment from the end-December 2020 level predominantly due to the reavailment of the P540.00 billion short-term loan facility from the BSP (Bangko Sentral ng Pilipinas),” the Treasury said.

To recall, the Philippine central bank granted the P540-billion loan request of the national government for budgetary support amid fiscal deficit arising from the COVID-19 pandemic.

In 2020, the national government incurred a wider fiscal deficit of P1.371 trillion as greater public spending to address the COVID-19 pandemic coupled with subdued revenue collections further squeezed state coffers.

Domestic debt accounted for the lion’s share of 71%, while foreign loans comprised the remaining 29%.

The national government’s domestic debt stood at P7.325 trillion during the period, up 9.4% from end-December 2020 level of P6.694 trillion.

The Treasury attributed the growth in local debt to “net availment of domestic financing amounting to P630.84 billion including the P540 billion provisional advances availed by the national government from the BSP for budgetary support.”

Foreign debt, meanwhile, amounted to P3.001 trillion, down 3.2% from end-December 2020 level of P3.1 trillion.

“The lower external debt figure was caused by the net repayment of foreign loans amounting to P93.49 billion and the P8.47 billion effect of third currency depreciation against the dollar,” the BTr said.

“These more than offset the P3.55 billion effect of local currency depreciation on dollar denominated loans for the period,” it added, noting that the Philippine peso depreciated against the US dollar from P48.021:$1 as of end-December 2020 to P48.076:$1 as of end-January 2021.

Broken down, US dollar, Japanese yen, Euro, and other currencies contributed 21.81%, 4.22%, 1.94% and 0.50%, respectively, to the total foreign debt, according to the Treasury.

Sought for comment, Rizal Commercial Banking Corp. chief economist Michael Ricafort said the higher debt stock in end-January 2021 “may reflect the record budget deficits recently, reflecting the record government spending, thereby reflecting the need for more government borrowings.”

“Reduced government tax revenues due to the adverse economic effects of COVID-19 also prompted the need for more government borrowings/debt. The need for finance the purchase of more COVID-19 vaccines would also lead to more government borrowings/debt,” Ricafort said.

Nonetheless, the BTr said the weighted average interest rate (WAIR) remains stable.

WAIR as of end-January 2021 improved to 4.13% from 4.17% in December and 4.95% a year ago, it said.

“The debt portfolio reflects minimal exposure to interest rate volatility. As of end- January 2021, only 9.56% of the debt stock is subject to refixing, limiting exposure to a rising interest rate environment,” the Treasury said.

Moving forward, Ricafort said that any further measures to re-open the economy would result in higher tax revenue collections amid increased economic activities that could temper budget deficits, thereby temper further rise in debt-to-gross domestic product ratio (GDP).

Ramped up borrowing efforts last year brought the debt-to-GDP ratio, the amount of the country's debt relative to the size of the economy, to a record-high of 54.5%, its highest since 2006.

The government earlier vowed to keep the country’s debts at “sustainable and responsible level” or within the 60% internationally-recommended debt threshold.—AOL, GMA News