Total gov't debt climbs 7.7% to over P5-T as of April
MANILA, Philippines - The national government's debt climbed 7.7% to P5.075 trillion as of end-April from P4.711 trillion as of the same month a year ago, according to data from the Bureau of Treasury.
That translates to P53,989 debt for every Filipino, given a population of 94 million.
Foreign debt reached P2.056 trillion as of end-April from P2.026 trillion a year ago. Borrowings from abroad made up 40.52% of total debt. The high ratio is not surprising since the Philippines often looks to foreign sources to plug the budget deficit. The country is one of the most active participants in the global debt market.
The majority of debt, 59.5%, came from local sources. Domestic debt rose 12.4% to P3.018 trillion as of end-April from P2.685 trillion a year ago.
Compared to the previous month, foreign debt decreased and domestic debt increased. Foreign debt dropped by P17.46 billion from March to April as the peso gained strength against the US dollar, shaving P28.97 billion off foreign debt. Meanwhile, domestic debt increased P3.76 billion from the recorded end-March level since the government issued more securities than it redeemed during the period.
However, from March to April, total contingent debt declined to P548.97 billion from P549.50 billion.
Philippine officials, analysts and market participants usually watch the deficit reports to get guidance on whether new tax measures should be passed, new debt instruments issued, interest rates raised or lowered, and whether the government should increase or temper spending for infrastructure and social services.
The deficit is the difference between acutal spending by government and the revenues it collects through the tax, customs, and treasury agencies, as well as from sale of state assets. Debt is what it uses to plug that deficit.
A large deficit can be a cause of concern in developed countries. But in developing countries, like the Philippines, spending on vital infrastructure and social services, which can increase debt, is considered necessary. Still deficit shows the ability of the government to responsibly manage its money.
The Aquino administration projects that the budget deficit will make up 2.6% of gross domestic product this year. The government is targeting cutting the deficit to only 2% by 2013. - Rappler.com