THE outstanding debt of the national government has hit another record high of P11.64 trillion as of end-August this year, rising by more than a fifth from a year ago amid the Covid-19 pandemic.
From only P9.62 trillion as of August 2020, the outstanding debt has already gone up by 21.1 percent.
In just a month, it has also increased by P32.05 billion or 0.28 percent from P11.61 trillion recorded in July this year.
Taking the bulk of the debt stock as of end-August are domestic borrowings which cornered 70.6 percent while the remaining 29.4 percent were from foreign sources. Both domestic debt and foreign debt also grew year-on-year during the period.
Domestic debt has already reached P8.22 trillion, soaring by 22.5 percent from P6.7 trillion in August last year.
Compared with P8.12 trillion in the previous month, domestic debt has also inched up by P100.7 billion or 1.2 percent.
On the other hand, foreign debt as of end-August amounted to P3.42 trillion, posting a double-digit growth of 17.9 percent year-on-year from P2.9 trillion.
Unlike domestic debt, foreign debt fell by 2 percent or P68.65 billion when compared to the previous month’s level at P3.49 trillion. The month-on-month decline in foreign debt was attributed by the Treasury to the net repayment of foreign loans amounting to P34.22 billion.
Apart from this, the peso value of external obligations was lowered due to the local and third-currency fluctuations against the US Dollar.
Meanwhile, total outstanding guaranteed debt also went down by 3.3 percent to P432.22 billion from P446.997 billion in August 2020.
Likewise, it also dropped by 2.7 percent from P444.31 billion in July this year.
According to the Treasury, net repayments on both domestic and external guarantees caused the decline in guaranteed obligations.
The government expects outstanding debt to hit P11.73 trillion by the end of this year and P13.42 trillion in 2022.
Freedom from Debt Coalition’s Rovik Obanil warned on Thursday that the country could be facing a similar crisis period in the 1980s given the spike in the country’s debts, the widening deficit as well as the drop in revenues.
“Considering what we noted as our ballooning debt in the face of declining revenue generation, such that our budget deficit is widening, I must repeat that there is a very real danger we could be entering another period of crisis similar to the 1980s,” Obanil said in a virtual forum.
Using Treasury data, Obanil pointed out that the average annual growth rate of outstanding debt of the national government under the Duterte administration is 3.5 times that of the Aquino administration.
To address the debt situation, FDC Board Member Racquel Castillo proposed some policy actions, including the imposition of wealth tax, revival of Congressional debt audit as well as cancellation of all debt interest payment and suspension of all loan principal payments for three years at the minimum, while the economy has yet to get back on its feet.
“It’s obscene that those who lend money during these times of Covid will still draw profit, from the interest on what they loan out,” Castillo said.
The country’s debt-to-GDP ratio this year is projected to rise to 59.1 percent and peak next year at 60.8 percent—slightly above the internationally accepted threshold—before gradually tapering off to 60.7 percent and 59.7 percent in 2023 and 2024.
The Department of Finance also sees the national government returning to its pre-pandemic debt and budget deficit levels as early as 2024 or by 2025, if the recommended fiscal measures are passed early by the next administration and if the economy quickly recovers.
Image courtesy of NAIA Media Affairs Divison