Public Fiscal Administration

Public Borrowing

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Presentation Overview
Theory of Public Debt
Structure of Philippine Public Debt
Public Debt: Issues and Problems

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 Theory of Public Debt
What is Public Debt?

- money or credit owed by any level of

government

Obligations of government, particularly those

evidence by securities to pay certain sums to the
holders at some future date.
- Encyclopedia Britannica

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Classical Theory of Public Debt 
Formed during 18th century (Age of
Mercantilism) until 19th century (Age of
Capitalism)

Theory that believes in the essence of

“Laissez- Faire” policy.

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Neo-Classical Theory of Public Debt
Extension of Classical Theory (later part
of 19th century)

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  Keynesion Theory of Public Debt 

“Modern Theory of Public Debt”

• Government should control the economy
• Formed after the “Great Depression in 1930”

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Sources of our nation’s fund and
resources:
• Taxes
• Selling of government’s properties
• Payments for IDs and certifications
• Penalties
• GOCCs

• DEBT

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Four stages of Public Debt according to
Angel Yoingco
1. Borrowing the funds
2. Spending the funds
3. Raising revenue for payments
4. Actual debt repayment

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Classification of Public Debt
Sources
◦ Foreign
◦ Domestic
Category
◦ Direct
◦ Guaranteed
◦ Non-Guaranteed
Maturity
◦ Short term
◦ Medium term
◦ Long term

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SOURCES: Philippine Domestic Debt
and Philippine Foreign Debt
Domestic Debt (Internal)- owed to
lenders within the country

• Foreign Debt (External)- owes to foreign

creditors

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Internal debt (Domestic)
(in million pesos)
as of September 2021

Loans - 540,156
Debt Securities - 7,847,597
Total - 8,387,753

Source: Debt Monitoring Analysis Division (DMAD)-BTr

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 External Debt (Foreign)
(in million pesos)
as of September 2021

Loans - 1,987,144
Debt Securities - 1,542,150
Total 3,529,394

Source: DMAD-BTr
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CATEGORY: Direct, Guaranteed and
Non-guaranteed
Direct-made directly from lender to
borrower, rather than a third party
Guaranteed- promise by a one party to
assume the debt obligation of a borrower
Non-guaranteed- not guaranteed for
repayment by a public entity because it is
payable solely from pledged specific for
earnings of revenue

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MATURITY: Short term, Medium term
and Long term 
 Short term - any financial obligation that
is either due within a 12-month period or
due within the current fiscal year
Medium term- type of fixed income
security with a maturity, or date of
principal repayment, that is set to occur in
two to 10 years
Long term- any liabilities to be paid
within 11 years and above
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BORROWING IS NOT A SIN
From an objective point of view, there are
benefits relating to a positive public debt
position
Government debt serves as an investment
instrument for the private sector.

-dbm

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Government debt allows tax smoothing in
cases where there is sudden need to incur
large government expenditures.

-dbm
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Should Filipinos worry about the national
debt?
The government has no choice but to
borrow money to finance its pandemic
response. Experts say Filipinos shouldn’t
worry too much over borrowings

- JC PUNONGBAYAN, MARIANNE VITAL AND JEFF ARAPOC 

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Why can’t we just print more money to
pay debt?
Printing more money
 Consumers are able to demand more
goods, but if we will have same amount of
goods, suppliers will respond by putting
up prices.

Printing more money will cause inflation.

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Walang silbi yang #feeling blessed mo pag
siningil ka na ng inutangan mo.

Sa ating panahon ngayon, mas tumatagal pa

ang utang kaysa sa inyong relasyon.

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 Thank you
and
more utang to
come.
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