Professional Documents
Culture Documents
Outline (1)
Philippine Debt Profile 2007 Snapshot of Total Philippine Debt Public Debt - Focus on National Government External Debt
NG Debt External
(to be added later: Closer look at Domestic Debt; Breakdown of GOCC Debts and GFI Debts)
Philippine Debt Through the Years Consolidated Public Sector Debt National Government Debt
NG Debt External
Fiscal Situation and Fiscal Impact of the Debt Arroyo, Debt and the Fiscal Crisis National Government Contingent Liabilities
Outline (2)
Brief History of Debt Restructuring and Debt Relief Schemes Relevant Laws on the Debt and Borrowings
Relevant Policies Relevant Laws
Philippine Debt
PUBLIC
PRIVATE
EXTERNAL
DOMESTIC
TOTAL
Php 5.144 T US$ 111.51 B
Public Debt
Php 4.219 T US$ 91.47 B
Private Debt
Php 0.925 T US$ 20.04 B
US$ 2.81 B
Public Debt taken from DoFs Consolidated Public Sector Debt Private Foreign Debt was taken from BSPs Private External Debt Private Domestic Debt was taken from BSPs FCDU loans of private residents Foreign Exchange Rate was pegged at BSPs end-September 2007 rate: US$1=PhP46.1315
Public Debt
Public Debt
PUBLIC
External
Domestic
NG Outstanding
end 2007
Php
3.712 T
US$
89.24 B
Php 2.201 T 0.614 1.565 0.022 0 Php 1.511 T 0.226 0.354 0.033 0.898
US$ 52.91 B 14.76 37.61 0.54 0.00 US$ 36.33 B 5.44 8.51 0.80 21.58
Source: Bureau of Treasury SDAD Note: Breakdown of totals may not add up due to rounding of digits
NG Contingent Liabilities
Domestic Debt Foreign Debt
0.484
0.065 0.419
11.64
1.56 10.08
19.35
6.29
4.74
0.50 0.19
Ot h
er s
Bo nd
Co mm erc
Bi lat e ial
ral
Mu ltil ate ra
OPEC - Organization of
Petroleum Exporting Countries
OPEC Fund for International Development (OFID) International Fund for Agricultural Development (IFAD) International Bank for Reconstruction and Development (IBRD) International Development Association (IDA)
3,043.43
3500.0 3000.0 2500.0
1,474.30
2000.0 1500.0 1000.0
15.95
500.0 0.0
7.25
28.62
172.35
ADB
EIB
OFID
IFAD
IBRD
IDA
5%
8%
Transportation 6% Agriculture 8%
6%
Agrarian Reform 2%
7% 17%
Health 2% Others 1%
Export Finance and Insurance Corporation (EFIC) Bank Austria AG Government of Belgium Paris Club Account without Peso Blocked Deposit w/ BSP Brunei Investment Agency Canadian Agency for International Development (CIDA) Export Development Corporation (EDC)
China Export Import (EXIM) Bank China National Constructional & Agricultural Machinery import & Export Corporation (CAMC)
Danish International Development Agency (DANIDA) French Protocol Loans Kreditanstalt fuer Wiederaufbau (KfW)
NG Debt External Lenders Bilateral p2 Italy Japan Kuwait Paris Club Saudi Arabia South Korea Sweden United States (US)
Italian Protocol Loans Mediocredito Centrale (MCC) Japan Bank for International Cooperation (Japan EXIMBANK and OECF, and via Paris Club) Kuwait Fund for Arab and Economic Development (KFAED) Paris Club Account without Peso Blocked Deposit w/ BSP Saudi Fund for Development (SFD) Korean Export-Import (KEXIM) Bank Swedish International Development Cooperation Agency (SIDA) Public Law 480 United States Agency for International Development (USAID)
5,000.00
4,000.00
3,000.00
2,000.00
1,000.00
354.75
190.99
115.06
87.81
60.12
54.58
61.66
Japan
Austria
France
China
Canada
Australia
South Korea
5%
Others 1%
Raiffeisen Zentralbank (RZB) sterreich AG Credit Commerciale de France Deutsche Bank AG ABN-AMRO Bank Banco Bilbao Vizcaya Banco Santander
12% 38%
Tulay Pangulo Magsasaka Project 12% Tulay Pangulo para sa Magsasaka 8% 8% Tulay ni Erap sa Barangay 24% Tulay ng Pangulo sa Kaunlaran 9% Tulay sa Szopad 38%
9%
24%
22,735.80
25,000.00
20,000.00
15,000.00
10,000.00
3,379.89 1,036.76 1,185.62 527.75 486.07 456.79
5,000.00
2007
DA
DECS
DENR
DOF
DOTC
DPWH
RP (NG)
5,000
4,369
4,000 3,000 2,000 1,000 1993 1994 1995 1996 1997 1998
1,913 1,949 2,167 2,237 2,952 2,669
3,666 3,624
3,850
1999
2000
2001
2002
2003
2004
2005
Ramos
Estrada
Arroyo
2006
6,000 5,000 4,000 3,000 2,000 1,000 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 External Domestic
Ramos
Estrada
Arroyo
6
Total Public Sector Debt
5 4 3 2 1 0 1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Ramos
Estrada
Arroyo
2006
30%
Public Sector Debt Growth Rate National Government Debt Growth Rate
20%
15%
10%
5%
0%
1994
-5%
1995
1996 Ramos
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Estrada
Arroyo
-10%
Growth rate of CPS steep rise in recent years under GMA Decrease from 2004 to present factors:
Forex Rate Pre-payment Less Borrowings
Relevant Developments:
NPC Borrowings (account for big part of GOCC debt) impact on ratio of NG and Non NG debt; Assumption of NPC liabilities after privatization must take a look at impact From 1999 to 2000: Huge drop in domestic debt and increase in external conflict with data released earlier changes in recording system?
Aquino
Ramos
Estrada
Arroyo
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ForeignDebt DomesticDebt
After 1986 (post Marcos period) increase in domestic debt vs external Factors: During Aquino period, more difficult to borrow from external sources than borrowing domestically; Eventually, restoration of credit rating, hence heavy external borrowing; but also heavy domestic borrowing capital available ?? Buyers of domestic bonds may also be subsidiaries of foreign banks
NG Outstanding Debt
1,000 900 800 700 600 500 400 300 200 100 -
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Ramos
Estrada
Arroyo
2007
NG Outstanding Debt
25
20
15
10
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Aquino
Ramos
Estrada
Arroyo
2007
Aquino
Ramos
Estrada
Arroyo
NG Debt to GDP from 2004 seem to indicate improvement as GDP has been increasing. NG debt per capita very steep rise, and only small decrease since 2004
50 45 40 35 30 25 20 15 10 5 -
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Aquino
Ramos
Estrada
Arroyo
2007
70
60
50
40
30
20
10
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Ramos Estrada Arroyo
GDP Real (1985 prices) per capita NG Debt (1985, prices) per capita
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Aquino
Ramos
Estrada
Arroyo
2007
0.60
0.50 GDP Real (1985 prices) per capita NG Debt (1985, prices) per capita 0.40
0.30
0.20
0.10
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Aquino
Ramos
Estrada
Arroyo
Short term debt vs medium and long term debt; Rise of bonds and financial instruments The government is on a drive to restructure old debts, and improve debt manageability. Continuing the post-Marcos policy and IMF-WB prescription of
preferring medium-to-long term debts over short-term debts, preferring financial market instruments such as bonds over other forms of loans.
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Marcos
Aquino
Ramos
Estrada
Arroyo
2007
50.00
40.00
30.00
20.00
10.00
1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Marcos
Aquino
Ramos
Estrada
Arroyo
Multilateral
Bilateral
60%
40%
20%
Suppliers
0% 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Others
Aquino
Ramos
Estrada
Arroyo
NG Assumed Liabilities
4,000
Assumed
3,500
3,000
2,500
2,000
1,500
1,000
500
1990 1991 Aquino 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Arroyo 2005 2006 2007 Ramos Estrada
80
70
60
50
40
30
20
10
1990 1991 Aquino 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Arroyo 2005 2006 2007 Ramos Estrada
Inexhaustible Debt
6.00 5.00 4.00 3.00 2.00 1.00 5.35
5.29
3.71
1990 NG Outstanding Debt 1991 to 2007 NG + Borrowings from Debt Service 1991-2007
S1
National Government Borrowings, Debt Service (principal and interest) in billion pesos, nominal
900 800 700 600 500 400 300 200 100 0 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Marcos
Aquino
Ramos
Estrada
Arroyo
500
400
300
200
100
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Marcos
Aquino
Ramos
Estrada
Arroyo
2007
Our gross borrowings and our total debt servicing (interest plus principal) are almost at par with each other. The government is borrowing more than its deficit because it has to cover for the principal amortization of debts which is an off-budget expenditure.
National Government Borrowings & the Budget Deficit, in billion pesos, nominal
700
600
Borrowings Deficit
500
400
300
200
100
0 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
-100
Marcos
Aquino
Ramos
Estrada
Arroyo
Marcos
Aquino
Ramos
Estrada
Arroyo
National Government Borrowings, Debt Service, Budget Deficit, in billion pesos, nominal
900 800
Borrowings
700 600 500 400 300 200 100 0 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 -100 2007
Marcos
Aquino
Ramos
Estrada
Arroyo
Total Expenditures
1,000
Borrowings
800
600
400
200
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Marcos
Aquino
Ramos
Estrada
Arroyo
2007
1,000
800
600
400
200
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Marcos
Aquino
Ramos
Estrada
Arroyo
2007
1,000
Non-tax Revenues
800
Tax Revenues
600
Debt Servicing
400
200
1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Marcos
Aquino
Ramos
Estrada
Arroyo
Aquino
Ramos
Estrada
Arroyo
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Marcos Aquino Ramos Estrada Arroyo
10%
15%
20%
25%
30%
35%
0% 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Arroyo 2004 2005 2006 2007 Estrada Ramos Aquino Marcos
5%
Interest payments have been increasing in nominal terms Interest payments as percentage of budget improved since 2005 but has not gone below the levels during the 1980s debt crisis. Crisis for the lenders not in terms of the impact on spending but whether you can pay, in full, on time
1,400
NG: Total Expenditures vs Interest Payments vs Total Social Services vs Health vs Education
Total Expenditures Social Services
1,200
1,000
Education
800
Health
600
Interest Payments
400
200
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Marcos
Aquino
Ramos
Estrada
Arroyo
2007
10,000
8,000
6,000
4,000
2,000
1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Aquino
Ramos
Estrada
Arroyo
2,000
1,000
500
1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Aquino
Ramos
Estrada
Arroyo
Figures show that the drop in debt payments from 2006 to 2007 did not translate into a proportional increase in social spending.
Neglecting Education
Basic Education Spending per pupil (deflated)
3500 3000 2500 2000 1500 1000 500 0 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Marcos
Aquino
Ramos
Estrada
Arroyo
Neglecting Health
Health per capita (deflated)
100 90 80 70 60 50 40 30 20 10 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Marcos
Aquino
Ramos
Estrada
Arroyo
2,500
2,000
1,500
1,000
500
1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Aquino
Ramos
Estrada
Arroyo
P 42,819.42
P 1,165,898.02
34.51%
295.75
Health
22.90
328.34
41.18
10.06 61.42
1,000
Non-tax Revenues
800
600
400
200
Privatization Proceeds
in billion pesos
90.62
5.66
10.00
9.43 1.72 4.18 4.65 1.17 0.59 0.57 0.42 2.43 5.82
0.00
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Ramos Estrada Arroyo
55.9 52.7
64.7
23.9
Comparing Aquino's, Ramos', Estrada's and Arroyo's Revenues, Expenditures and Borrowings 7,000,000.00 6,000,000.00 Revenues 5,000,000.00 Expenditures Borrowings 4,000,000.00 3,000,000.00 2,000,000.00 1,000,000.00 Aquino Ramos Estrada Arroyo
Administration
Amount in B Php
5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Aquino
Ramos
Estrada
Arroyo
2007
Aquino
Ramos
Estrada
Arroyo
BRIEF HISTORY OF DEBT RESTRUCTURING / RESCHEDULING / DEBT RELIEF for the PHILIPPINES
1960s 70s - the Philippines was unable to service a significant portion of its private debt. Negotiations for debt service rescheduling with the London Club resulted in new loans for the Philippines as part of the debt rescheduling package. 1983 - The Philippines defaulted on its foreign obligations in 1983 and negotiated for a moratorium on debt service payments in 1984. 1985 - Philippines underwent a debt rescheduling measure thru the Baker Plan which involved increased bank lending for the implementation of the adjustment program under the IMF.
Sources : US Department of State, 1993 Country Reports on Economic Practice and Trade Reports; www.rrojasdtatabank.org; Training Package 9 - Commercial Debt Chapter IX.3.a: The London Club , The London Bank; World Bank Operations Evaluation Department, 2001;
1986 - There was a gradual shift towards longer-term and more concessional sources of financing, away from short-term, commercial debts. 1989 - The Brady Plan initiated for the Philippines, culminating in the signing of the 1992 Securitization Deal. Loans were converted into Brady Bonds. 1990 World Bank financed the Debt Management Program Loan to the Philippines.
March 1993 Paris Club and IMF arrangements ended with the Philippines generally in compliance with the IMF targets. 1994-1997 The Philippines started its IMF Exit Program last 1994 and ended in 1997.
1996 1997 - the Philippines swapped $4.4 billion of Brady bonds for uncollateralized long-term bonds as a form of debt reduction. Because the swap was effected at a discount based on secondary market prices, debt outstanding commensurately reduced. 2000s Pre-payment (2006), Privatization and Regressive Taxation were implemented as policies.
RELEVANT LAWS
FOREIGN BORROWINGS ACT (R.A. 4860) dated September 8, 1966
DESCRIPTION
This law authorizes the President to obtain foreign loans for economic development as well as to guarantee foreign loans and/or bonds incurred by government owned and controlled corporations. A Presidential Decree that prioritizes debt servicing which assures creditors of regular and updated debt payments at all times.
P.D. No. 1177, Section 31 Automatic Appropriations (July 30, 1977) Now incorporated in Article VI. Section 24. of the 1987 Administrative Code
This law gives authority to the President to 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. Aside from ensuring that Foreign loans can only be incurred through monetary authority, this Constitutional provision also gives prime importance on public access to information on these loans.
BSP CIRCULAR NO. 1389 DATED 13 APRIL 1993, AS AMENDED (PART TWO, CHAPTER I)
A Bangko Sentral ng Pilipinas circular which states that Foreign borrowings of the public sector need prior BSP approval except short term Foreign Currency Deposit Unit (FCDU) loans specified under Section 24.4 of Circular No. 1389.
The Philippine BOT AMMENDMENTS: Law (Republic Act No. 7718), July 26, An Act amending certain Sections of 1993
This provision allows private sectors to finance, construct, operate and maintain priority projects Republic Act No. 6957, included in the entitled An Act development programs of Authorizing the all concerned government Financing, agencies including Construction, government-owned and Operation and controlled corporations Maintenance of Infrastructure Projects and local government units.
by the Private Sector, and for other Purposes.
AMMENDMENT REPUBLIC ACT 8182 AS AMENDED BY REPUBLIC ACT 8555, OFFICIAL DEVELOPMENT ASSISTANCE ACT OF 1996
AN ACT EXCLUDING OFFICIAL DEVELOPMENT ASSISTANCE FROM THE FOREIGN DEBT LIMIT IN ORDER TO FACILITATE THE ABSORPTION AND OPTIMIZE THE UTILIZATION OF ODA RESOURCES, AMENDING FOR THE PURPOSE PARAGRAPH 1, SECTION 2 OF REPUBLIC ACT NO. 4860, AS AMENDED
The ODA Act of 1996 states that it will finance only projects that promote economic development and welfare of developing countries and that it is concessional in character and which contains a grant element of at least 25 percent (calculated at a rate of discount of 10 per cent).