Third Reflection Paper

More borrowings, weak peso swell govt debt

MANILA TIMES: THE national government’s debt stock surged in January because of more borrowings and a weaker peso.

Data from the Bureau of Treasury showed that the government’s debt stood at P4.741 trillion, or P23 billion more than the end-December level.

Based on the Philippines’ population estimate of 94 million, the country’s debt would translate to each Filipino owing the country’s creditors some P50, 427.

Of the total outstanding debt, 44 percent is owed to foreign creditors while 56 percent is due domestic creditors.

The Treasury said the foreign component of the debt increased by P66 billion from the end-December level because of P55-billion in net availment and the P11 billion impact of the peso’s depreciation against the dollar.

The government also sold the equivalent of $1.25-billion worth of global peso notes in January.

The domestic component of the debt fell by 43 percent from the end-December level because of the net redemption by the sovereign of outstanding Treasury papers.

The government paid more due and demandable debt than the amount of Treasury bills and bonds issued during the period.

The government’s contingent debt—comprised mainly of guarantees it issued —was unchanged from the previous month’s P550 billion.

The government earlier said the debt stock would breach the P5-trillion mark by the end of the year as it intends to borrow on behalf of government-owned and -controlled corporations.

Last month, the government tapped the global financial markets for the second time when it floated $1.5-billion worth of 15-year dollar-denominated IOUs to lengthen the country’s debt profile and reduce interest costs.

The projected P5.135-trillion outstanding debt by year-end would be equivalent to 55 percent of the country’s economic output as measured by its gross domestic product (GDP).

Last year, the country’s debt-to-GDP ratio stood at 55.4 percent, down from the previous year’s 57.3 percent.

The country’s economic managers aim to reduce this ratio to 43 percent by the end of the Aquino administration’s term in 2016.

The government relies heavily on foreign and domestic borrowing to plug its budget deficit, which is programmed to hit P300 billion this year.  By Katrina Mennen A. Valdez

http://www.manilatimes.net/business/more-borrowings-weak-peso-swell-govt-debt/

Reaction:

     It is very painful to think that our country, Philippines, will borrow again some money from the global financial markets.  Because of this, questions seeking for clarifications about this issue filled my mind. First of all, is it really a necessity?  Second, can't the government cut the pork barrel of our senators and congressmen to utilize them for the poor people and to save the Philippines from extremely large debts?  Third, is the money sent by the OFWs and all the Filipino people living in the various corners of the world not enough that the government should borrow again? How about our taxes? And, lastly, the most painful thing to hear, is it really "DEBT" that keeps the Philippines alive as a country?

    In my own opinion, this debt causes a large destruction to our economy.  Filipino people have carried enough burden caused by the increase in price of goods and services. Causing another burden which owes each of us P50, 427 to the country's creditors is very heavy. If you will ask me about this, I can't imagine myself paying that amount of money. I'm pretty sure that all of us have a hard time thinking of paying that kind of debt especially to those poor people. I am aware that Filipino citizens are screaming at the top of their lungs to the government asking for their accurate guidance and service.

   Accurate guidance and service means a strict proper collection of taxes without favoritism, honest government officials that would not engage to corruption, and proper utilization of our natural resources. As we all know, Philippines is very rich in natural resources. Because of this, why not use them? I hope the government can hear our views and opinions. There should be a concrete and clear conversation between the government and the citizens regarding this serious issue.