As the government continues to borrow funds in response to the COVID-19 pandemic, the Philippines' debt has reached a P12-trillion mark as of end-January 2022, becoming the country’s largest debt pile to date, limiting borrowing options for the future president.
In a report stated by the Bureau of Treasury, the country’s debt ballooned from P10.33 trillion to P12.03 trillion, accounting for a 16.5% debt increase since last year of the same month. Of the country's outstanding debt, about 69.9% or P8.37 trillion were domestic debt, while the remaining 30.4% or P3.66 trillion were funded from external foreign sources.
Compared to end-December last year, the domestic debt increased by 2.4% or P197.38 billion due to the government’s availment of the P300 billion provisional advances from Bangko Sentral ng Pilipinas (BSP) to fund its pandemic response.
On the other hand, the external debt totaled an increase of 2.9% or P103.7 billion due to the declining value of the Philippine peso against the dollar. At the same time, other reasons include the piling debts and obligations from other foreign lenders.
In response to the country's swelling debt, Finance Secretary Carlos Dominguez stated that the government has plans to strengthen the country’s fiscal position by paying its debts to BSP by June this year. However, according to several economists and market analysts, the bigger issue now lies where all the borrowed money went. Although the amount of taxes collected by the government might have decreased due to economic decline, billions of pesos were still available for the government to utilize in funding its assistance for its citizens.
Despite the ever-growing debt since the start of the pandemic, the country has yet to go back to the circumstances of the “traditional” normal.
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