State debts breached P17-T mark in June

The national government’s outstanding debt crossed the P17-trillion mark for the first time in June, driven by higher local borrowings meant to plug the state’s fiscal shortfall.

Total obligations went up by 2.1 percent month-on-month to P17.27 trillion, a new record high, the Bureau of the Treasury (BTr) reported on Wednesday. Since the beginning of the year, debts have piled up by 7.6 percent or P1.2 trillion.

Figures showed domestic borrowings, which accounted for 69.2 percent of the total debt load, grew by 1.4 percent to P11.95 trillion. This was on the back of “strong demand” for government securities like Treasury bills and Treasury bonds.

External debts went up by 3.5 percent to P5.32 trillion.

Despite the increase in liabilities, the BTr said state debt “remains sustainable.” The Marcos administration wants the government to bag the coveted “A” credit rating within its term—an ambition that would require efforts to reduce the state’s budget deficit.

“The government continues to prioritize domestic borrowings,” the Treasury said.

“This strategy is consistent with the government’s goal to boost the local capital market while lowering foreign exchange risks and building investor trust in Philippine-issued securities,” it added.

The government plans to borrow P2.6 trillion from local and foreign sources to plug a budget gap of P1.6 trillion, or 5.5 percent of gross domestic product.

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But figures showed the government grappled with a P765.5-billion budget deficit in the first semester, which exceeded its P760-billion ceiling for the period by 0.63 percent, or P4.8 billion.

The breach happened after the Marcos administration missed its revenue target of P2.28 trillion by 0.89 percent or P20.4 billion. It was also underspending by 0.51 percent or P15.6 billion compared to its P3.04-trillion disbursement goal.

“The national government’s prudent debt management approach strategy reflects the Marcos administration’s commitment to safeguarding fiscal sustainability,” the BTr said.