The government expects its outstanding debt to rise by P339 billion in 2017, data from the Budget Department show.
The latest budget expenditures and sources of financing report released by the department showed that outstanding debt of the national government was expected to increase 5.5 percent to P6.526 trillion in 2017 from the projected P6.187-trillion debt in 2016.
It said of the total outstanding debt, financing from the domestic market would increase 5.9 percent to P4.382 trillion in 2017, while fund sourcing from foreign market was expected to grow 3.2 percent to P2.143 trillion.
Outstanding debt in 2017 was expected to significantly increase as the Duterte administration set a goal to raise the budget deficit ceiling to 3 percent of gross domestic product to fund massive infrastructure and social services development.
Domestic outstanding debt in 2016 was projected to rise 5.8 percent to P4.11 trillion, while foreign outstanding debt was seen to decline 0.3 percent to P2.07 trillion, data showed.
To fund the deficit target, the government needs to borrow from either local or foreign sources.
The ratio between the government’s debt and the whole economy dropped to 43 percent of gross domestic product in the last semester in office of former President Benigno Aquino III.
Finance Secretary Carlos Dominguez III said during the inter-agency Development Budget Coordination Committee hearing in Senate, he expected debt-to-GDP ratio to further drop to 42.8 percent of GDP and 41.6 percent in 2016 and 2017, respectively.
Of the total debt-to-GDP ratio in January to June, domestic debt declined to 28.8 percent while foreign debt ratio fell to 14.2 percent.
The Finance Department aimed to reduce government debt to about 35 percent of GDP by 2022 despite the increase in public spending by the Duterte administration.
Dominguez assured local and foreign portfolio investors and fund managers that under the Duterte administration, the intended spike in public spending would go hand in hand with strict observance of fiscal discipline.
He said the targeted budget-deficit ceiling of 3 percent of GDP up to 2022 would be religiously observed.
“We are fortunate that the last two administrations have managed government finances well, as this has given us headroom for higher public spending… We will absolutely make sure we do not breach the deficit ceiling,” Dominguez said.
The economy grew 6.9 percent in the first semester of 2016, while national government debt stood at P5.9 trillion in the same period.