Government loans reached P1.86 trillion in 7 months

MANILA, Philippines – The government borrowed P1.86 trillion from local and foreign sources from January to July, a level roughly equivalent to total loans for the past two years.

As the government calls for more short-term loans to combat COVID-19 and revive the economy from a pandemic-induced recession, President Duterte will leave a record $ 13.7 trillion debt in 2022, whose share of the gross domestic product (GDP) at that time will be the highest in 17 years.

At the end of July, gross domestic lending mainly from the sale of Treasury bills and bonds amounted to P1.38 trillion, the latest data from the Treasury Office showed.

Gross external loans for program and project loans, as well as foreign bond issues, reached P481.2 billion.

Total loans for the first seven months approached the combined 2018 and 2019 amounts of P1.91 trillion — P897.6 billion two years ago and P1.02 trillion last year.

In a presentation to the House appropriations committee on Friday at the start of hearings on the proposed P4.5 trillion national budget for 2021, Finance Secretary Carlos G. Domínguez III said gross loans would amount to more of P3 trillion this year, P3.03 trillion in 2021 and P2.32 trillion in 2022.

Domínguez said that most of the loans will be obtained locally: 74 percent of the total this year; 85 percent next year and 80 percent in 2022, as the national financial system is awash in cash.

As the 2021 budget documents have shown, these loans will lift the outstanding debt of the Philippines to new highs of P10.16 trillion by the end of the year and P11.98 trillion next year.

As for debt / GDP, the ratio that reflects the ability to pay obligations, Domínguez said that these would increase to 53.9 percent by the end of 2020, to 58.1 percent in 2021 and 59.9 percent in 2022.

This means that in 2022, the debt-to-GDP ratio will reach a 17-year high, the highest rate since 65.7 percent in 2005.

These increases in the debt-to-GDP ratio over the next three years will offset the gradual decline over the past decade to a record low of 39.6 percent in 2019.

With an estimated nominal GDP of P22.35 to 23.29 trillion in 2022, the amount of outstanding debt would be between P13.39 trillion and P13.95 trillion.

When asked by the Inquirer last Friday if these calculations were similar to the government’s projections, National Treasurer Rosalía V. de León responded that the outstanding debt would be within that range, or around P13.7 trillion.

However, Domínguez said that the projected debt-to-GDP ratios from 2020 to 2022 were “even lower compared to the country’s historic high debt level of 71.6 percent of GDP in 2004.”

Domínguez said that as of Aug. 27, the Philippines, through the Department of Finance, has already borrowed $ 8.83 billion from bilateral development partners, multilateral lenders, and from the offshore commercial market to finance the fight against the health and socioeconomic crises inflicted. by COVID. -19 pandemic.

“Of the total amount, $ 5.98 billion is budget support financing from the Asian Development Bank, the World Bank, the Asian Infrastructure Investment Bank, a French development agency and the Japan International Cooperation Agency. Meanwhile, we raised $ 2.35 billion from our latest global bond offering that hit our lowest coupon in the US dollar market. The remaining $ 496.36 million is made up of grants and loans from our development partners for various specific COVID-19 projects, ”said Domínguez. INQ

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