Assignment

National Event:” Philippines’ Outstanding Debt as of May 2023”

The National Government’s (NG) total outstanding debt amounted to P13.86 trillion as of March 2023.
NG’s total outstanding debt increased by P104.15 billion or 0.8% from the previous month, primarily due
to the net issuance of domestic and external debt. Of the total debt stock, 68.7% was sourced
domestically while 31.3% were external borrowings. NG domestic debt rose to P9.51 trillion, P71.00
billion or 0.8% higher compared to the end-February 2023 level. In March, the P72.87 billion net
issuance of domestic securities outweighed the P1.87 billion effect of local currency appreciation against
the US dollar on onshore foreign currency-denominated securities. From the end-December 2022 level,
NG domestic debt has increased by P304.78 billion or 3.3% External debt amounted to P4.34 trillion,
P33.15 billion or 0.8% higher from the previous month. The increment in NG’s external obligation for the
month was attributed to the P84.26 billion net availment of foreign loans and the P18.53 billion impact
of thirdcurrency adjustments against the US dollar. These more than offset the P69.64 billion effect of
local currency appreciation against the US dollar. From the December 2022 level, the country's external
debt has increased by P133.27 billion or 3.2%. Month-on-month, total NG guaranteed obligations
decreased by P3.07 billion or 0.8% to P384.12 billion as of the end of March 2023. The lower level of
guaranteed debt was due to the net repayment of both domestic and external guarantees amounting to
P0.01 billion and P1.52 billion, respectively. The net appreciation of the peso relative to the US dollar
further trimmed P2.99 billion. These were tempered by the net appreciation of third-currency-
denominated guarantees against the US dollar amounting to P1.45 billion. From the December 2022
level, NG guaranteed debt has decreased by P14.93 billion or 3.7%.

Socio-Cultural Impact
Debt has several effects on a country. A country's debt is called sovereign debt, as
the loans are taken out by the sovereign, or the authority of the country. Some of
these effects are positive, some are not. The positive effects include money for new
construction projects and increased sales from exporters. Negative effects require
the citizens of a country to give up benefits, including land, natural resources, and
government services

Economic Stimulus
Sovereign debt can serve as an economic stimulus. Expensive projects--such as
borrowing money to open additional storefronts--performed by a company can
provide advantages in the future. Similarly, a country may use deficit spending to
fund expensive projects such as highway construction and building new power plants
that provide future benefits. Deficit spending is spending more money than the state
receives in a given time period.

Currency Exchange Rates

Currency exchange rates drop with additional debt. Since the country is borrowing
more money, it must sell more of its bonds and there is an increased risk it can't pay
them back. The country's credit rating may drop in extreme cases. The cheaper
currency has an economic stimulus effect. For example, if the British pound drops in
value, it helps exporters since British exports are now cheaper for customers in other
countries. Imported goods prices increase, helping local manufacturers while
increasing costs for other citizens. If a country is part of an economic group with a
shared currency such as Greece, these effects occur across all countries in the group.

Land Sales
Land and resource sales are one result of debt. The Louisiana Purchase was the result
of U.S. President Thomas Jefferson buying land from French Emperor Napoleon
Bonaparte so that Napoleon could pay off sovereign debts from his military
campaigns. California Governor Arnold Schwarzenegger offered the state's
possessions at an auction and sold state properties, including state fairgrounds, to
reduce California's debt in 2010.

Privatization
Privatization of state enterprises is also a result of debt. In Russia, the state paid off its
bills by selling state oil companies to the oligarchs. Countries in South America sold
off state firms such as water companies, metal mines and fruit plantations to reduce
their obligations.

Political Instability
Debt can lead to political instability. A country will generally raise taxes and reduce
services when debts reach a high level. The country may not be able to afford its
military or police, increasing risks of foreign invasion and crime. Debt may even
topple a government, such as Iceland's did following the 2008 economic collapse,
especially if a bailout of politically connected investors is the cause of sovereign debt