PH debt breaches ₱9T in June as gov't borrows more for pandemic response

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Metro Manila (CNN Philippines, July 29) –– The Philippines' debt soared past the ₱9-trillion mark in June as the government borrowed more for its pandemic response measures, the Bureau of the Treasury said Wednesday.

In a statement, the Treasury said outstanding loans reached ₱9.05 trillion during the first half of the year, adding ₱163.3 billion compared to May as the state borrowed more funds from local and foreign sources.

Authorities have so far borrowed an additional ₱1.3 trillion when compared to the 2019 debt level, as it scrambled to fund interventions to treat COVID-19 patients and prevent further infections. The gap is bigger as tax collections dwindled as a result of strict lockdowns which forced most businesses to go dark for several months.

Six senators have asked the Commission on Audit to conduct a special probe into government spending related to COVID-19, given the billions of pesos of realigned funds, loans, and donations received from local and international sources.

Senators Risa Hontiveros, Franklin Drilon, Kiko Pangilinan, Leila De Lima, Ralph Recto, and Ping Lacson filed Senate Resolution 49 on Tuesday, citing allegations of overpriced purchases of protective gear and equipment.

"Congress is set to deliberate on the 2021 budget and, anticipating that massive allocations will need to be made to address the health, economic and social impacts of COVID-19, it is of critical importance that there be audit finding to guide legislators in their exercise of the power of the purse," the lawmakers said.

The bulk of the loans were borrowed from domestic investors, which totaled ₱6.2 trillion. Of the amount, ₱1.1 trillion was borrowed between January to June.

The Treasury issued debt notes and signed a ₱300-billion short-term credit line from the Bangko Sentral ng Pilipinas to pad its cash position, payable in six months.

The remaining one-third was sourced from foreign lenders, which reached ₱2.9 trillion. This is 10 percent higher when compared to end-2019 levels, partly tempered by a stronger peso exchange rate at ₱49.70 to a dollar.

For June alone, the government raised ₱413.5 billion from foreign borrowings, against ₱113.5 billion debts repaid during the month.

The government has so far secured program loans worth ₱216.3 billion for coronavirus response, with ₱130.5 billion from the Asian Development Bank and ₱85.8 billion from the World Bank.

RELATED: ADB extending more loans for PH pandemic response, infrastructure projects in 2020

As a developing economy, the Philippines spends more than what it can collect in funding so that it can begin new and high-impact projects –– in this case, the coronavirus response, with local infections nearing 85,000 by end-July.

Meanwhile, the government has set aside ₱460 billion to settle its maturing debts.

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