Government debt slides slightly to P5.9 T

On higher payments, stronger peso in March

MANILA, Philippines – Higher payments and a stronger peso brought down the value of the National Government’s (NG) debt pile as of the first quarter, data from the Bureau of the Treasury showed.

NG debt stood at P5.9 trillion as of the end of March, down 0.7 percent from February. On a year on year basis, however, NG debt was up 1.9 percent.

The state’s debts are accumulated and are best gauged monthly with borrowings added and payments scratched off during the period.

“The reduction in domestic obligations was primarily due to the net redemption of government securities...and as well as lower peso valuation of onshore dollar bonds...,” the Treasury said in a statement.

“The reduction in external obligations was driven by a downward adjustment in the peso value of US dollar-denominated debt,” it added.

Domestic debt accounted for P3.84 trillion from January to March, 0.2 percent lower than the end-February level, suggesting the government redeemed or bought back more bonds than it issued.

A stronger peso-dollar exchange rate of P45.989 was also used to compute for the debt levels in March. This was better than the P47.57 the previous month.

Because of this, foreign loans availed by agencies and state companies fell 1.1 percent to P787.11 billion.

There were more dollar bonds floated during the first quarter.

A strong currency means lesser local money shelled out to pay for foreign debt. The yen has been dropping in value because of zero interest rates and cheap credit in Japan.

The combination of higher payments and peso’s strength also pulled down contingent debts or those of agencies guaranteed by the government and are not included in its balance sheet.

Guaranteed obligations amounted to P442.84 billion, down 2.6 percent from end-February. 

“This was brought about by the combined effect of lower peso valuation of dollar-denominated guarantees and net repayments...,” the Treasury said.