Understanding Public

Debt
Domestic Borrowings
Bernraf C Orpiano | PA-227 Class
Domestic Borrowings
Understanding Public Debt
  Domestic Borrowings, also known as ‘Internal Debt’, is considered
part of the government debt (coming along with External Debt), in
which they owed to different lenders and investors inside the
efining country.
 These people can be individuals, businesses, and financial
omestic institutions.
orrowings  Government debt as a whole augments with taxation to cover
budgetary requirements of the government as a whole in a certain
fiscal period, for its operations and development-oriented
programs.
  According to Investopedia.com, A government bond is a debt
security issued by a government to support government spending and
obligations. Government bonds can pay periodic interest payments
called coupon payments.
 Another definition, according to Bankrate.com, a government bond
is a form of security sold by the government. It is called a fixed income
security because it earns a fixed amount of interest every year for the
duration of the bond. The purpose of a government bond is to raise
overnment money to operate the government and to pay down debt.
ond  Treasury Bills, Notes, and Bonds fall under this category.
  A debt security is a debt instrument that can be bought or sold
between two parties and has basic terms defined, such as the
notional amount (the amount borrowed), interest rate, and
maturity and renewal date.
 Examples of debt securities include a government bond,
corporate bond, certificate of deposit (CD), municipal bond, or
preferred stock. Debt securities can also come in the form of
collateralized securities, such as collateralized debt obligations
ebt Securities (CDOs), collateralized mortgage obligations (CMOs), mortgage-
backed securities issued by the Government National Mortgage
Association (GNMA), and zero-coupon securities.
  The government incurs domestic borrowings or domestic debt
through the issuance of fixed-income securities and debt
instruments, such as “Treasury Bonds”, “Treasury Notes” (not
applicable in the Philippines), and “Treasury Bills”.
 The said fixed-income securities and debt instrumentalities are
considered as “risk-free investment” that pays interest regularly
omestic through interest coupon payments.
orrowings –
he Means of
suance
  Treasury Bills, or “T-Bills”, are obligations with maturity of one
year or less, typically issued at a discount to the maturity value.
 The characteristics of treasury bills that it is auctioned off to
investors at a discount to their face value.
 The investor’s return is the difference between the face value and
the discount price paid at purchase.

easury Bills
  Treasury Bonds are long-term obligations with maturities ranging
from 2 years to 25 years, typically issued at par with periodic
coupon payments to be made up to final maturity.
 Purchasers of Treasury Bonds receive a fixed-interest payment
either quarterly or semi-annually, with the face value of the bond
being paid to the investor upon maturity.
easury
onds
Understanding
Domestic Debt
Figures per presidential administration since 1986
  Overall domestic debt in 1986 amounting to Php 227 Billion Pesos.
 That amount increased to Php 497 Billion in 1992, the year when her term ended.
 Throughout her term, the domestic debt of the country went twofold by Php 270 Billion.
 Debt securities increase significantly, from Php 88 Billion to Php 437 Billion when she
stepped down as President, a five-fold increase.

orazon C.
quino
986-1992)

Source: https://www.treasury.gov.ph/wp-content/uploads/2022/02/Annual-Debt-1986-2021_web.pdf
  Throughout his term, the country’s domestic debt incurred by at least Php 357 Billion, higher
than what was incurred by his predecessor.
 The percent increase incurred in domestic debt between his administration from those of his
administrator is at 75.6%.
 Debt securities increased to at least Php 788 Billion in 1998.

del V. Ramos
992-1998)

Source: https://www.treasury.gov.ph/wp-content/uploads/2022/02/Annual-Debt-1986-2021_web.pdf
  Total domestic debt has breached Php 1 Trillion under his administration, which it took place in
the year 2000.
 Domestic debt on loans increased to Php 63 Billion from Php 44 Billion from 1997, and it
decreased to Php 34 Billion in 2000 and lowered further to Php 29 Billion in 2001.

oseph E.
strada
998-2001)

Source: https://www.treasury.gov.ph/wp-content/uploads/2022/02/Annual-Debt-1986-2021_web.pdf
  Total domestic debt increased more than double of the figures provided in 2001.
 What was Php 1.247 Trillion at the start of her administration, has increased to Php 2.818
Trillion upon leaving the office.

oria M.
rroyo
001-2010)

Source: https://www.treasury.gov.ph/wp-content/uploads/2022/02/Annual-Debt-1986-2021_web.pdf
  Total domestic debt started at Php 2.8 Trillion at the start of his administration.
 It doubled upon the end of his administration in 2016 at around Php 4.1 Trillion.
 Debt Securities increased by Php 1.224 Trillion from Php2.709 Trillion in 2010 to Php 3.933
Trillion in 2016.

enigno S.
quino III
010-2016)

Source: https://www.treasury.gov.ph/wp-content/uploads/2022/02/Annual-Debt-1986-2021_web.pdf
  Overall domestic debt doubled from Php 4 Trillion to Php 8 Trillion, with the huge increase took
place in 2020 and 2021.
 2019 figures is at around Php 5.3 Trillion, which it increased by Php 1.6 Trillion in 2020, and by
Php 1.4 Trillion in 2021.
 Primary factor on the increase is due to the pandemic response, which hampered economic
growth and development.

odrigo R.
uterte
016-2022)

Source: https://www.treasury.gov.ph/wp-content/uploads/2022/02/Annual-Debt-1986-2021_web.pdf
Thank You for Listening!
PA-227 Report