Public debt is expected to reach new record highs in the coming months as the government looks for additional sources to finance the budget deficit, an economist said over the weekend.
Rizal Commercial Banking Corp. chief economist Michael Ricafort said in a report the weakening peso contributed to the increase in government debt in the past few months.
Latest data from the Bureau of the Treasury showed outstanding government debt hit an all-time high of P12.89 trillion as of end-July.
“For the coming months, the government’s outstanding debt could still reach new record highs in view of additional government borrowings to finance the budget deficit,” Ricafort said.
He, however, said this might happen at slower increments after the government front-loaded borrowing requirements before the elections.
“The weaker peso exchange rate vs. the US dollar in recent months [new record of 56.90 as of September 2, 2022; up 11.3 percent vs. 50.999 in end-2021] partly increased the peso equivalent of the government’s foreign debts,” Ricafort said.
The Treasury said Saturday the P96.09-billion or 0.8 percent increase in government debt from the end-June level was due to the net issuances of domestic and external loans as well as currency adjustments.
Government debt also increased P1.16 trillion or 9.9 percent since end-December 2021, but the debt-to-GDP ratio improved to 62.1 percent in the second quarter from 63.5 percent in the first quarter.
Data showed that of the total debt stock, 31.5 percent was sourced externally while 68.5 percent represented domestic borrowings.
Domestic debt amounted to P8.83 trillion in July, up by P65.07 billion or 0.7 percent from the end-June level.