The National Government’s outstanding debt hit a record P12.03 trillion at the end of January after it got another zero-interest loan from the central bank and borrowed locally, according to data from the Treasury bureau.
The end-January debt level rose by 16.5% from a year earlier and by 2.6% from December.
About 70% of the debt stock were obtained locally, while the rest came from overseas.
Domestic debt rose by 2.4% to P8.37 trillion from a month earlier and by 14.2% from a year ago.
In a stateent, the Treasury bureau traced the monthly increase to domestic borrowings worth P197.04 billion, including P300 billion in provisional advances from the Bangko Sentral ng Pilipinas (BSP).
The zero-interest loan from the central bank is lower than a similar loan it got earlier worth P540 billion. This reflects the central bank’s gradual policy normalization as the economy recovers from a coronavirus pandemic, the BSP said.
Outstanding government securities fell by 1.3% from a month earlier to P8.067 trillion and rose by 18.9% from a year earlier.
The external debt stock stood at P3.661 trillion as of end-January, up by 2.9% from December and by 22% from a year earlier.
“For January, the increment in external debt was attributed to the impact of peso depreciation against the dollar amounting to P11.23 billion and the net availment of external obligations amounting to P94.88 billion,” the Treasury bureau said.
These were partially offset by adjustments in other foreign currencies worth P2.37 billion, it added.
Tax reforms should help the country’s fiscal sustainability amid its rising debt, said Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp.
“There is a need to further increase tax revenue collections to keep the budget deficit and the country’s debt at sustainable levels,” he said in a Viber message.
The country risks its credit rating being lowered due to rising debt, ING Bank-NV Manila Senior Economist Nicholas Antonio T. Mapa said in an e-mail.
“The Philippines remains susceptible to possible ratings action for as long as debt levels remain at precariously high levels — anything above 60% of the gross domestic product,” he said. “Furthermore, according to Fitch Ratings, we may need to demonstrate the ability to gradually lower debt to more acceptable levels.”
Last month, Fitch Ratings kept the country’s investment grade “BBB” rating, while keeping a negative outlook. This means its credit rating could be lowered in the next 12 to 18 months.
Mr. Mapa noted that while much of the country’s outstanding debt is in pesos, the currency’s depreciation against the dollar could make borrowings more costly. The peso closed at P51.74 a dollar on Friday.