DEBT MANAGEMENT PROGRAM

DEBT MANAGEMENT

Got debt? Looking for the light at the end of the tunnel? A DEBT Management may help!

Sabi sa Picture Kung may utang ka ba ? Sundan mo yun liwanag sa dulo ng tunnel,,,nanduon

daw yun kasagutan kung paano mababayaran ang pagkakautang, Bago tyo mangutang, dapat

pinag aaralan na mabuti at the same time may source tayo kung paano bayaran ang debt.

Applicable both individual and govt. Baon sa Utang pag hindi pinag aralan,,, Don’t spend more

than what you earns!

A Debt Management Program might be the answer.

WHAT IS DEBT MANAGEMENT?

Debt Management- is the process of establishing and implementing a strategy for prudently

managing the government's debt in order to:

 Raise the required amount of funding

 Achieve its risk and cost objectives
 Meet any other sovereign debt management goals that government may have set
Debt Management ito yun pag plan ng Pag-utang,,kung paano natin mababayaran yun

Debt that don’t affect/burden much in our economy, at ma reduce yun costs ng interest

ng Debt at ma identify possible source of revenue to cover the debt obligation

HOW DOES THE PHILIPPINE NATIONAL GOVERNMENT MANAGE ITS DEBT?

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  Senate Bill No. 729 “AN ACT CREATING THE DEBT MANAGEMENT BOARD,

APPROPRIATING FUNDS THEREFORE, AND FOR OTHER PURPOSES” This Act shall be

known as the "Debt Management Board Charter” was introduced by SEN. JINGGOY

EJERCITO ESTRADA.
 Through the Executive Order No. 232, s. 1970 “CREATING THE PRESIDENTIAL

DEVELOPMENT BUDGET COMMITTEE” was created on May 14, 1970

Development Budget Coordination Committee (DBCC) acts as TWG to review,

evaluate, make a feasibility study, and make policy measure in planning to trail of Borrowing

The role of the DBCC is primarily to review and approve the:

 macroeconomic targets, program that benefits development of our economics

 revenue projections, study Gross Domestic Product, Income of Govt to fund to

support the annual program of govt.

 borrowing level, to measure of our cash flow is sufficient to pay our current Debt

Obligation, to identify borrowing domestic or foreign loan.

 aggregate budget level and-
 expenditure priorities-
To be responsible for annual budget and guarantee that
the prioritization and allocation of fund is proper and
appropriate

MEMBERSHIP OF THE DBCC:

The Committee is composed of the principals of the four member agencies:
1. The Department of Budget and Management (DBM), Resource Allocation and

Management, allocation of Budget, release of budget and management of created

under Executive Order No. 25 dated April 25, 1936, is mandated under this Order and by

subsequent issuances to promote the sound, efficient and effective management and

utilization of government resources (i.e., technological, manpower, physical and

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 financial) as instrument in the achievement of national socioeconomic and political

development goals.
2. The Department of Finance (DOF) Revenue Generation and Debt Management, source

of revenue/ compute debt service, loan either Domestic or Foreign

is the government’s steward of sound fiscal policy. It formulates revenue policies that

will ensure funding of critical government programs that promote welfare among our

people and accelerate economic growth and stability.

3. The National Economic and Development Authority (NEDA), Overall Macroeconomic

Policy, Impact analysis on economic and social development in our country. is the

country’s premier socioeconomic planning body, highly regarded as the authority in

macroeconomic forecasting and policy analysis and research. It provides high-level

advice to policymakers in Congress and the Executive Branch.

4. Office of the President (OP), Presidential Oversight, under The 1987 Constitution

provides that: “The President may contract or guarantee foreign loans on behalf of the

Republic of the Philippines with the prior concurrence of the Monetary Board, and

subject to such limitations as may be provided by law. Because of this, The President

has the POWER to Borrow money as much and for as long as he/she wants.
5. Bangko Sentral ng Pilipinas (BSP) as a resource institution, provide Monetary

Measures and Policies. The BSP study the effects of these borrowing to promote a low

and stable inflation. Check foreign reserve. All governments borrowing whether in peso

or foreign currency denominated require the approval of the Monetary Board of BSP.

The BSP study the effects of these borrowing to promote a low and stable inflation

(maintain price stability), balance of payments and sustainable economic growth.

After the President signed recommend for public hearing at Congress and Senate to

pass a BILL. Very long process have a chance to rejected ( EMERGENCY POWER ISSUE )

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Why doesn’t the BSP just print the money instead of borrowing the money?
Many often ask why governments don’t print more money to deal with the problem of national

debt.
The reason is that printing more money doesn’t increase economic output in any way – it

merely causes inflation.

 Kung ang government natin mag print money will not increase wealth and solve the

problem in DEBT. Ang maging implication ay INFLATION…mawawalan ng value ang

pera ,,
 Kung marami kang pera ang tendency bumili ng bumili, So ang mangyayari ay

mauubos yun resources…para di maubos ang resources,,, need to double the price for

goods and services….need to increase the price .it lead to DEBT CRISIS may occurs.

may discourage investments to enter into the country and present foreign investors in

the country would be expected to pull capital out of the country

 That’s what happened in Zimbabwe and Venezuela, and many other countries that

were hit by hyperinflation. Venezuela ISSUE

What is Debt?
 Debt refers to the stock of total liabilities or obligations at any given time, whether of

the national government or the consolidated non-financial public sector, or both.

 The public debt is how much a country owes to lenders outside of itself. These can

include individuals, businesses, and even other governments.

 The term "public debt" is often used interchangeably with the term sovereign debt.
Because the power given to the President- Power to Borrow money as much and as

long as he want

Public Debt With Its Pros and Cons

When Public Debt is Good?
 Public debt is a good way for countries to get extra funds to invest in their economic

growth (Borrowing Money to make More Money)

Public Debt is Good?

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  When used correctly, proper allocation public debt will improves the standard of living

and economics and social growth

When Public Debt is Bad?

 If government is running a substantial deficit, Government tend to take on too much

debt
If gov’t tend to much debt,
o means higher interest will have to paid, increase in interest rates will cause

borrowing to became difficult at all level

o higher debt level will mean limited jobs opportunity and lower salaries
 Misappropriation of debt
o it happen pag di pinag aralan mabuti ang pag utang,,mababaon ka lang,
o dapat alam mo may capacity to pay the Debt,, and have possible source of fund

to pay your debt obligation.

Example: If a Government borrows a million to build road, brigdes (under Build Build

Project), (A soon to be profitable business) yun inutang natin mag- earns a financial

reward. That is good

If Government borrows a million to use for a government program like 4P’s Pantawid

Pamilyang Pilipino Program aims to eradicate extreme poverty in the Philippines by

investing in health and education is Bad. Why give them livelihood or job.

What are the sources of public debt

The sources of public debt can be categorized in to :
Domestic Debt or Internal Debt
 Refers to a country’s borrowing from own national resources. This borrowing

has no effect on increasing or decreasing national income.

Foreign Debt or External Debt
 Refers to the resources provided from a foreign country that is repaid with

principal and interest at the end of a certain period. External debt has an

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 increasing effect on national income when it is taken and vice versa has a

decreasing effect on national income when it is paid.

Which is Better Domestic Debt or Foreign Debt?
Domestic Debt is considered less burdensome as compare to Foreign Debt, Mainly

because of:
 Foreign Debt, it affects our Foreign Currency Reserves.
The process of payment of interest, pay with foreign currency denomination, while Domestic

pay with our own currency in PESO, is repayable only in domestic currency, kapag naubos yun

Foreign currency cause of deficit in Foreign Currency to buy/import supply and goods from

other countries. Internal debt is repayable only in domestic currency. It imply a redistribution of

income and wealth within the country & therefore it has no direct money burden
 Foreign debt poses threats to the Economic and Political Independence of our

country.
If we Cannot pay interest and principal amount, the resources are transferred from creditor

country.. Like happen now, It possible may happen now ,. What happens if the

Philippines can't pay off loans from China? Transfer of resources and China may take

control of the country's patrimonial assets.

How does the Philippine Government Pay its Debt?
"Debt Service" refers to the sum of loan repayments, interest payments, commitment fees

and other charges on foreign and domestic borrowings: (similar to SERVICE CHARGE/Penalty

on BANKING SYSTEM)
 Debt service is the cash required to pay back the principal and interest of

outstanding debt for a particular period of time. (similar to SERVICE

CHARGE/Penalty on BANKING SYSTEM)

 The debt service ratio is a tool used to assess a government's leverage.

(Formula/Computation use to compute how much interest ratio to pay)

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  In order to carry a high debt load, the government must generate consistent

and reliable profits to service the debt. (para mabayaran natin yun sobrang

taas ng Debt,,,,Govt will able looking for other source of revenue to cover its

current debt) high tax

How much is the Debt of the Philippines 2019?

Banko Sentral ng Pilipinas (BSP) according to Gov. Benjamin E. Diokno,

announced that the Philippines outstanding debt as end of March 2019 up by US

$ 73.10 billion dollars or 7.8 Trillion in pesos

Debt Burden @ 101 million population will pay amount of 77,265/individual
Transfer inherited from generation .

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