NG debt hits record 12.76 trillion pesos

Outstanding NATIONAL (NG) government debt hit a record high of P12.76 trillion at the end of April as it continued to increase borrowing to support economic recovery from the pandemic.

Preliminary data from the Bureau of the Treasury (BTr) showed that the stock of debt rose by 0.7% from the 12.68 trillion pesos at the end of March “due to the net issuance of government securities to lenders. local and external and the depreciation of the local currency against the US dollar.

Year-on-year, the stock of debt jumped 16.1%, from 10.99 trillion pesos.

Stock of national public debtThe BTr said the debt pile had risen 8.8% since the start of the year, after the government borrowed an additional 1 trillion pesos.

Of the outstanding debt, the bulk, 70%, was raised domestically, while the rest came from foreign creditors.

Domestic debt stood at 8,940 billion pesos at the end of April, up 0.8% from the end of March, due to 66.3 billion pesos of net recourse to domestic financing. This figure was 14.4% higher than the level of 7.8 trillion pesos a year earlier and 9.4% higher than the end-December 2021 level of 8.17 trillion pesos.

Most of the outstanding domestic debt still came from government securities with 8,640 billion pesos in April, up 18.8% year on year and 0.8% month on month.

At the same time, the stock of external debt jumped 20.4% year-on-year to reach 3,830 billion pesos at the end of April. It edged up 0.4% month-on-month and rose 7.6% from the end-December 2021 level.

“For the period, the increase in external debt was due to the net use of external loans amounting to 28.56 billion pesos and the effect of the depreciation of the peso against the US dollar amounting to 31.5 billion pesos. This was tempered by adjustments in third currencies amounting to 43.86 billion pesos,” the Treasury said.

National government guaranteed debt increased by 0.6% month-on-month to P413.43 billion at the end of April, due to the net drawdown of domestic and external guarantees.

Rizal Commercial Banking Corp. chief economist Michael L. Ricafort said the record debt reflected government borrowing before the election to fund infrastructure projects, support fuel subsidies and other programs response to the pandemic.

“Given the string of government debt stock records in recent months, stepping up tax collections from existing tax laws may not be enough and would inevitably require further reform measures. fiscal/fiscal to limit further borrowing/debt by the government, especially for the new administration,” he added.

The executive director of the Institute for Leadership, Empowerment and Democracy (iLEAD), Zy-zya Nadine Suzara, said the increase in debt could be due to the infrastructure push of the outgoing administration.

“It is difficult to say whether the ongoing external problems have affected the country’s debt, in particularmainly since most of the new debt acquired from March to April 2022 was domestic,” she said in a Viber message. “At most, rising oil prices and overall uncertainty have played a role in increasing the need for cash…It’s more plausible that the government is truly cash-strapped to fund the rest of the programs of the year.

Ms Suzara said the debt is expected to rise further since the government cannot generate enough revenue.

“To close the budget gap, the total financing requirement from domestic and external sources is expected to reach P2.2 trillion. So far, the report on Treasury cash operations shows that at the end of April 2022 it is already around 1.2 trillion pesos,” she said. “If the next administration does not change the current fiscal program, we can expect about an additional 1 trillion pesos on top of the current stock of debt through the end of the fiscal year.”

Bank of the Philippines chief economist Emilio S. Neri said debt will be a major challenge for the new Marcos administration.

“The new group of economic managers are very competent and if they can convince our politicians to swallow bitter pills to help us deliver a solid fiscal consolidation plan, we may be able to reverse the deterioration in the economic parameters. debt,” he said in a Viber message. .

President-elect Ferdinand “Bongbong” R. Marcos, Jr. tapped Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno to lead the finance department.

Mr Diokno said he was not in favor of higher taxes, even with record debt.

“For me, grow the economy, focus on tax administration first, improve collection,” he told ABS-CBN News Channel earlier. — Bernadette Therese M. Gadon

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