More taxes ahead as PH debt stock breached P13T in August
The national government needs to further intensify revenue collection of existing taxes and come up with new ones as its debt stock breached the P13-trillion mark at P13.02 trillion as of the end of August, with new borrowings exceeding repayments.
According to the Bureau of the Treasury (BTr), P133.64 billion was added to total outstanding debt. This was incurred in August and represented a 1-percent increase in the debt stock that was pegged at P12.89 trillion at end-July.
During the eight months that ended Aug. 31, the debt stock increased by 11 percent or P1.29 trillion.
Local borrowings accounted for 69 percent of total or P8.94 trillion, increasing by 1.3 percent since end-July.
“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,” the BTr said.
“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,” it added.
Also, foreign borrowings represented 31 percent of total at P4.08 trillion. This increased by 0.6 percent in August due to the depreciation of the peso against the US dollar.
“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,” said Michael Ricafort, chief economist at the Rizal Commercial Banking Corp.
Ricafort said 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.
“All of [these] would help further narrow or improve the budget deficit and, in turn, slow the growth in the national government’s outstanding debt, as well as better prepare for eventual payment of the large borrowings incurred during the pandemic as they fall due in the future,” he added.
Based on the proposed national budget law for 2023, the government is scheduled to repay P1.6 trillion in debt, the highest yearly debt servicing on record.
Also, by the end of next year, 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.At the end of this year, local borrowings are expected to reach P9.2 trillion and foreign borrowings, P4.22 trillion.
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