Philippine Borrowing Experience The Latest

1. LATEST
PHILIPPINE
EXPERIENCE
IN PUBLIC
BORROWING

2. PUBLIC
BORROWINGS
- refer to funds obtained
from repayable sources,
such as loans secured by
the government from
financial institutions and
other sources, both
domestic and foreign, to
finance various
government projects and
activities.

3. DOMESTIC
BORROWINGS
- are funds obtained from sources within the country.
Domestic borrowings of the national government are
usually made through the auction of treasury bills,
notes and bonds to the public.
FOREIGN
BORROWINGS
- are funds obtained from sources outside the country,
such as Asian Development Bank (ADB), International
Bank for Reconstruction Development (IBRD), Overseas
Economic Cooperation Fund (OECF), etc. Foreign
borrowings can be obtained through loans secured from
foreign financial institutions or through the flotation of
government securities in the international market.

4. WHY DOES THE GOVERNMENT
BORROW?
✓ to finance national government deficits;
✓ to obtain foreign exchange;
✓ to secure financing at more favorable terms
than the opportunity cost of revenues;
✓ to take advantage of benefits attached to the
funds, e.g. technology; and
✓ to balance the timing of resources with the
project gestation and repayment of benefit

5. The Philippine government’s outstanding debt stood at P9.615 trillion as
of end-August 2020 amid the coronavirus crisis, the Bureau of the
Treasury (BTr) said on Wednesday, September 30.
Total debt stock in August grew by P450.9 billion or 4.9% from end-July
2020, primarily due to domestic securities issuances. From the end-
December 2019 level, debt increased by 24.4% – equivalent to P1.88
trillion.
Of the total outstanding debt stock, 30.2% were sourced externally,
while 69.8% are domestic debt.
Total domestic debt amounted to P6.7 trillion, 7.3% higher compared to
the end-July level, while overall external debt amounted to P2.9 trillion
or lower by 0.2%.

6. Understanding debt
While the country’s debt may sound alarming at first, it is important to look at several indicators
to appreciate the latest figures disclosed by the BTr.
Can the Philippines pay off its loans? Total loans of any country are better appreciated when
viewed alongside the size of the economy, represented by the debt-to-gross domestic product
(GDP) ratio.
A low number means that the size of a country’s economy is bigger than its obligations.
Department of Finance data showed that at the end of the 1st half of 2020, the debt-to-GDP ratio
climbed to 48.1%. This is much higher than the 39.6% recorded as of end-2019.
The figure, according to state economists and credit rating agencies, reflects that the Philippines
can pay off its debts.
In short, the country still has plenty of space to borrow.
In fact, economists and experts even argue that the Philippines is not borrowing and spending
enough for the pandemic.
The issue of where the money should go, however, is a different debate altogether.

8. EIGHTY-NINE billion pesos. That is the amount separating the Philippines’s outstanding debt from hitting
the P14 trillion mark. The amount is daunting on its face, but not surprising.
The administration of Ferdinand R. Marcos Jr. inherited a humongous debt burden when it assumed office
one year ago, just as the nation was ramping up its recovery from the Covid-19 pandemic, driven by the
adrenalin of trying to outrace the growth of borrowings incurred during the three-year health crisis.
The country’s debt stock level, at the end of April, stood at P13.911 trillion, the highest in history.
If the outstanding debt is to be divided to the country’s estimated population of 112,892,781, then every
Filipino is indebted by around P123,223.
The end-April debt level of the country is already 95.07 percent of the national government’s projected
P14.632-trillion debt by the end of the year.
And since President Marcos Jr. assumed office, his administration has incurred P1.11 trillion additional
debt from July to April. The ballooning debt does not scare Finance Secretary Benjamin E. Diokno as he
maintained that it remains manageable.
1 year on, Marcos administration bravely faces debt
challenges
•Jasper Y. Arcalas
•June 30, 2023/BusinessMirror.com.ph

9. The breakdown of the deals are as follows:
• $750 million – This amount is from the Philippines
First Sustainable Recovery Development Policy Loan,
which will support the country’s policy reforms aimed
at boosting environmental protection and climate
resilience.
• $276 million – For the Bureau of Fisheries and
Aquatic Resources’ Mindanao Inclusive Agriculture
Development Project and the Philippine Fisheries and
Coastal Resiliency Project. The projects aim to
sustainably increase agricultural productivity and
improve fisheries management.
• $110 million – For the Department of Education’s
Teacher Effectiveness and Competencies
Enhancement Project, which aims to improve
equitable access to quality teaching in kindergarten to
Grade 6 in the Zamboanga Peninsula, Soccsksargen,
and Bangsamoro Autonomous Region in Muslim
Mindanao.

14. Jan Feb Mar Apr May June Jul Aug Sept Oct Nov Dec
Domestic Debt 9,384,941 9,442,162 9,513,160 9,457,840 9,588,514 9,702,829 9,812,367 9,791,126 9,734,356 9,902,337 10,024,40 10,017,93
External Debt 4,313,553 4,310,592 4,343,736 4,453,299 4,508,028 4,445,021 4,431,926 4,558,455 4,534,314 4,578,463 4,484,314 4,598,337
Total 13,698,49 13,752,75 13,856,89 13,911,13 14,096,54 14,147,85 14,244,29 14,349,58 14,268,67 14,480,80 14,508,72 14,616,26
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
16,000,000
NATIONAL GOVERNMENT OUTSTANDING DEBT
For the Year 2023
(in Million Pesos)
Domestic Debt External Debt Total

17. 10,017,930
4,598,337
National Government Outstanding Debt
As of December 2023
(In Million Pesos)
Domestic Debt
External Debt
(31.5%)
(68.5%)
TOTAL = 14,616,267

18. References:
Cuaresma, Jocelyn C. Public Fiscal Administration. UP Open University
Financing of National Government Expenditures. https://www.dbm.gov.ph/wp-
content/uploads/2012/03/PGB-B5.pdf
https://www.treasury.gov.ph/
https://www.pna.gov.ph/articles/1171164
https://www.philstar.com/headlines/2023/08/07/2286790/government-forced-borrow-p4-billion-daily-
lawmaker
https://www.rappler.com/business/philippines-loans-world-bank-climate-resilience-agriculture-
education-june-2023/
https://www.bworldonline.com/infographics/2023/02/03/502772/national-government-outstanding-
debt-14/
https://www.ibon.org/national-government-outstanding-debt-as-of-may-2023/
https://businessmirror.com.ph/2023/06/30/1-year-on-marcos-administration-bravely-faces-debt-
challenges/

19. “It is a national responsibility to pay one’s country’s debts, but it is also national
responsibility not to pay for debts that did not even benefit the citizenry.”
— Briones, 1996