The Philippine Online Chronicles

Philippine national government debt increased by 5.4 percent from March 2009 to March 2010 despite an pronouncement earlier today by Gloria Macapagal-Arroyo that the country is “debt-free” from the International Monetary Fund (IMF).

According to a statement released by the Bureau of the Treasury, the country's total outstanding debt reached P4.458 trillion as of March 2010—a P229 billion increase year-on-year and a P100 billion increase from February 2010. This means that each Filipino has a debt of P47,425.

The outstanding debt is comprised of 57 percent, coming from domestic creditors and 43 percent from foreign creditors.

The national contingency debt meanwhile decreased to P585.7 billion from P617.3 billion in February.

Domestic loans increased by 5.5 percent and is at P2.537 trillion while foreign loans decreased by 1.7 percent.

Direct loans lent by international financial institutions (IFI) and those that were re-lent to government owned and controlled corporations dipped by as much as three percent. Japanese Yen bonds surged by 181.7 percent—from P26 billion to P73.2 billion—and had the largest foreign debt increase.

'Manageable' debt servicing

The Treasury reasoned that the decrease in foreign debt “was due to the P42 billion appreciation of the peso against the US (United States) dollar and P20 billion depreciation of the third (other foreign) currencies against the US dollar.”

The Bangko Sentral ng Pilipinas (Central Bank of the Philippines, or BSP) added that 33.1 percent of the country's economic output, represented by the gross domestic product, contributed to the decrease in foreign debt.

Arroyo said in her speech in today's Independence Day celebration. “Our debt servicing is more manageable than before. This has resulted in an improvement in our credit ratings and today we are debt-free from the IMF,” she said.

From P2.2 trillion to P4.5 trillion

University of the Philippines School of Economics professor and former Budget Secretary Benjamin Diokno highlighted a more than 100 percent increase in outstanding debt during the nine-year administration of Arroyo.

“When Mrs. Arroyo took power in 2001... public debt was P2.2 trillion. [Now] we have public debt of P4.5 trillion and still don’t know real picture,” Diokno said.

Diokno also emphasized on the effect of the economy under the Arroyo administration to the people. “If you talk to people you ask them if they’re better now than 10 years ago. Majority would say no. you just add the votes that went to Noy and Estrada that’s more than half of Filipino voters.”