Data from the Department of Budget and Management (DBM) revealed that the Philippines’ debt would keep rising in the next few months to end at ₱10.16 trillion by December.
Outstanding loans of the national government totaled ₱9.05 trillion as of June, adding ₱1.3 trillion in the first six months. Debt amounted to ₱7.73 trillion last year. Meanwhile, domestic loans are seen to hit ₱6.9 trillion, while foreign credit — accounting for a fourth of the sum — will be worth ₱3.25 trillion by December.
President Rodrigo Duterte, in his message for the ₱4.506-trillion national budget for 2021, said the economic team tempered revenue collection goals this year and for 2021 given the “significant blow” dealt by the COVID-19 crisis to economic activity. They now expect to collect ₱2.5 trillion from taxes and other fees this year against ₱4.3 trillion in projected expenses, which are used mainly to respond to the COVID-19 pandemic. This would leave a funding gap worth ₱1.8 trillion or nearly a tenth of gross domestic product (GDP) and be financed through borrowed money.
“From consistently managing and maintaining our deficit relative to GDP at conservative levels at 3 percent of GDP, the decision has been made to break from tradition and increase deficit financing. It is necessary — and it is justified. When tax revenue collections are dwindling — and when government spending is most critically needed — the government has to resort to deficit spending,” said Duterte.
For 2021, the government is set to borrow ₱3 trillion more, which will bring the year-end debt tally to ₱11.98 trillion. By next year, the country’s debt burden will be at 53.9% of GDP.