THE national debt is settling into a growth trajectory that is outstripping that of the budget, according to a policy think tank attached to the House of Representatives.
In its analysis of the proposed P5.768-trillion 2024 national budget, the Congressional Policy and Budget Research Department (CPBRD) noted that next year’s budget is set to grow 9.5% to P5.77 billion, against the 14.4% growth rate for National Government (NG) debt.
“(While) the total NG expenditure program has been steadily increasing, the rate at which it has grown is much lower compared to the growth of the debt burden since 2021,” according to the report, published earlier this month.
The NG’s outstanding debt hit a record P14.1 trillion as of May, the Bureau of the Treasury (BTr) said in July. The Budget department noted that it could grow further to P15.84 trillion in 2024.
“As the debt burden takes up a huge chunk of the national budget, the productive part of the budget that supports government operations and the implementation of programs/projects also gradually reduces in share,” the CPBRD added.
The NG is set to borrow over P2.46 trillion until next year, up 11.5% from this year’s P2.207-trillion program.
The planned borrowing will consist of P1.85 trillion in domestic debt and P606.85 billion in external borrowing.
The CPBRD also projected that NG debt as a share of gross domestic product (GDP) could peak at 61.4% in 2024 and sink below the 60% threshold to 57.9% by 2026.
“This debt-to-GDP trajectory can be described as conservative given the trajectories defined by the projections of the DBCC (Development Budget Coordination Committee),” the CPBRD said.
During the House appropriations panel’s hearing on the proposed budget for next year, the DBCC projected that debt-to-GDP is expected to peak at 60.2% by next year before settling at 58.5% in 2025 and 51.5% in 2028.
At the end of March, the debt-to-GDP ratio was 61%, still above the 60% threshold considered manageable for developing economies by multilateral lenders.
“The government appears poised to rely more on increasing taxes and adjusting expenditures rather than borrowing and/or expanding the money supply. Nevertheless, borrowing remains a major component of financing the budget gap,” it said. — Beatriz Marie D. Cruz