Knowing the Debt of Philippines

by Gily Tenorio on July 4, 2010

in Financial Education 101

Updated: July 28, 2011

Do you have debt? I think most of people have debt or had been in debt before. If you’re in debt, I think is your responsibility to pay for it faithfully. Even the Philippine government has debt because of budget deficit, the government needs to borrow money from domestic or foreign financial institution to support its projects and financial needs.

External debt or foreign debt is that part of the total debt of a country that is owed to creditors outside the country. The debtors can be the government, corporations or private banks and financial institution. The debt includes money owed to private commercial banks, other governments, or international financial institutions such as the IMF and World Bank.
Internal debt, on the other hand, is that part of the total debt of a country that is owed to creditors inside the country or this is domestic debt.

In the Philippines, we have both internal and external debt. In the latest data available, the internal debt of Philippines is greater the its external debt. This internal debt is owed to private banks and other financial institution located in the Philippines.

According to Bureau of the Treasury of the Philippine government, as of end of AprilĀ  2011, the external debt or foreign of debt of the Philippines reached P 2,026 billion (43% of total debt). While the internal or domestic debt reached to P2,686 billion (57% of totalĀ  Philippine debt).
In total, the Philippines has a combined debt of P4,712 billion.

In your opinion, how the Philippine government can pay its debt?

Note: FOREX Rate Used – P46.35

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