The national government (NG), already heavily indebted due to the ongoing health crisis, had the authority to borrow from foreign creditors $4.8 billion more in the first quarter this year.
This was bared Wednesday by the Bangko Sentral ng Pilipinas (BSP) whose policy-making Monetary Board approved NG’s plan to contract debt equal more or less P147 billion in local currency.
This adds to total NG indebtedness of P12.09 trillion as of latest data obtained from the Bureau of the Treasury and necessitated by the need to address the health risk posed by the ongoing pandemic and by the need to sustain the equally important bid to build critical public sector infrastructure.
The BSP said the Q1 2022 borrowings consisted of $2.25 billion in bond sales plus $2.55 billion more in project loans the NG has undertaken.
At $4.8 billion, the Q1 2022 borrowings are 69 percent higher than the $2.84 billion NG foreign borrowing program the year before.
NG presented a spending plan in which $2.25 billion will underwrite its budgetary operations, $2.0 billion for its transportation program, $300 million will cover its response to the COVID-19 health crisis and only $175.1 million for infrastructure.
Finance and monetary experts local and foreign have warned that unwinding the enormous public sector debt have to be managed judiciously against an economic climate where the cost of money, or interest rate, and the price of commodities and goods, or inflation, are forecast to rise significantly over the policy horizon.
Public sector debt as percent of local output measured as the gross domestic product (GDP) dramatically climbed from only 39.6 percent of GDP in 2019 to 53.5 percent in 2020 and estimated a tad lower to 53 percent as at end-2021.
Government debt is not bad in and of itself but could prove enormously harmful to the $361 billion Philippine economy when its borrowing cost becomes burdensome and ability to provide health, security and other services to Filipinos is severely hampered by lack of funds.