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National debt hits record P11.6-T in August ‘21

The national government’s outstanding debt reached a record high of P11.64 trillion as of end-August 2021, rising more than a fifth compared to last year. 

From P9.62 trillion in August 2020, the national debt spiked by 21.1%. 

Over just a month, it also increased by P32.05 billion or 0.28% from P11.61 trillion in July this year. 

Most of the debt as of August 2021 are domestic borrowings, accounting for 70.6% while the remaining 29.4% were from foreign sources. 

Domestic debt reached P8.22 trillion, increasing by 22.5% from P6.7 trillion in August last year. 

Foreign debt as of August amounted to P3.42 trillion, posting a double-digit growth of 17.9% year-on-year from P2.9 trillion. 

Foreign debt fell by 2% or P68.65 billion compared to the previous month’s level at P3.49 trillion. The decline was attributed by the Treasury to repayment of foreign loans amounting to P34.22 billion. 

Apart from this, the peso value of external obligations decreased due to the local and third-currency fluctuations against the US Dollar. 

Meanwhile, total outstanding guaranteed debt also went down by 3.3% to P432.22 billion from P446.997 billion in August 2020. It dropped by 2.7% from P444.31 billion in July this year. 

To rein in the debt situation, FDC Board Member Racquel Castillo proposed the imposition of wealth tax, revival of Congressional debt audit as well as cancellation of debt interest payments and suspension of loan principal payments for three years minimum. 

Castillo said, “It’s obscene that those who lend money during these times of Covid will still draw profit, from the interest on what they loan out.” 

The Department of Finance foresees the national government returning to pre-pandemic debt and budget deficit levels as early as 2024 or 2025, if recommended fiscal measures are enacted early by the next administration.

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