The national government’s (NG) outstanding debt is expected to reach a record PHP 15.84 trillion in 2024, according to the Department of Budget and Management (DBM).
Data from the DBM’s Budget of Expenditures and Sources of Financing showed the debt stock is projected to increase by 8.3% at the end of 2024, from the PHP 14.62-trillion debt level seen by the end of this year.
The government is projecting the NG debt-to-gross domestic product (GDP) ratio to settle at 60% by the end of 2024, and to 51.5% by 2028.
As of end-March, outstanding debt as a share of the GDP stood at 61%, still above the 60% threshold considered manageable by multilateral lenders for developing economies.
The NG is planning to borrow PHP 3.08 trillion in 2024.
Of the planned borrowings, PHP 2.47 trillion will come from domestic sources, while PHP 606.85 billion will come from external sources.
Principal payments are expected to reach PHP 1.86 trillion in 2024, composed of PHP 1.62 trillion in local debt and PHP 237.8 billion in foreign debt.
Meanwhile, the government set its debt servicing program at PHP 1.91 trillion next year, 19% higher than PHP 1.6 trillion this year.
Broken down, payments for domestic debt are programmed at PHP 1.47 trillion while foreign debt payments are at PHP 437.6 billion.
The DBM submitted on Wednesday the proposed PHP 5.768-trillion National Expenditure Plan (NEP) for 2024 to the House of Representatives.
To address the debt burden, 12% or PHP 699.2 billion of the proposed budget has been allocated for interest payments on domestic and foreign debt and net lending.
“While there has been an increase of PHP 88.2 billion in interest payments, our debt burden for fiscal year 2024 will take up only 2.6% of gross domestic product (GDP) in fulfillment of this administration’s policy to reduce the country’s outstanding debt as a share of GDP,” President Ferdinand R. Marcos, Jr. said in his budget message.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that the government may have to consider tax reforms to boost revenues and service its growing debt.
“In view of the streak of record-highs in the government’s outstanding debt in recent months, the intensified tax collection from existing tax laws may not be enough and would need fiscal reform measures in order to curb additional borrowings by the NG,” he said in a Viber message.
Apart from new or higher taxes, Mr. Ricafort also noted the need to rightsize the government and employ other measures to help narrow the NG’s budget deficit and reduce the need for borrowings. — Luisa Maria Jacinta C. Jocson
This article originally appeared on bworldonline.com