Philippines' debt stock breaches P13 trillion, says BTr. New taxes needed?

Photo illustration of a man using his smartphone to calculate his taxes. The Philippines needs further strengthen its tax revenue collection efforts after its debt stock exceeded P13 trillion mark in August. (PHOTO: Getty Images)
Photo illustration of a man using his smartphone to calculate his taxes. The Philippines needs further strengthen its tax revenue collection efforts after its debt stock exceeded P13 trillion mark in August. (PHOTO: Getty Images)

The Philippines' debt stock breached the P13-trillion mark as of the end of August, said the Bureau of the Treasury (BTr) on Friday (September 30).

"For August, the increase in domestic debt resulted from the net issuance of government securities amounting to P109.43 billion and the P1.78 billion impact of local currency depreciation against the US dollar," said the BTr, which noted that new debt is exceeding repayments.

"Since the beginning of the year, the domestic debt portfolio has increased by P772.98 billion or 9.5 percent due to continued reliance on domestic borrowing to lessen the impact of currency fluctuations."

According to the BTr, P133.64 billion was added to total outstanding debt in August, representing a 1-percent increase in the debt stock that was pegged at P12.89 trillion at end-July.

During the eight months that ended August 31, the debt stock increased by 11 percent or P1.29 trillion.

Local debt accounted for 69 percent of the total or P8.94 trillion, increasing by 1.3 percent since end-July.

In addition, foreign debt represented 31 percent of total debt at P4.08 trillion. This went up by 0.6 percent in August due to the depreciation of the peso against the US dollar.

The government is scheduled to repay P1.6 trillion in debt, the highest yearly debt servicing on record, based on the proposed national budget law for 2023,

Furthermore, by end-2023, the debt stock is projected to further increase to a new high of P14.63 trillion from the estimated P13.43 trillion at the end of 2022.

By end-December, local debt is expected to reach P9.2 trillion while foreign debt will hit P4.22 trillion.

In an interview with Inquirer, chief economist at the Rizal Commercial Banking Corp Michael Ricafort warned, "In view of large debt incurred of more than P5 trillion since the pandemic started in 2020, the new administration may still need to further intensify tax revenue collections based on existing tax laws, come up with new tax reform measures, increase tax rates, among others to further boost structural sources of government revenues."

Ricafort added that the Marcos administration could also adopt "more disciplined spending" through fiscal reform measures such as rightsizing the government and taking steps against corruption as well as leakage and wastage of public funds.