NFA loans hike state-guaranteed debts to P445B in 9 months

MANILA, Philippines – Cash withdrawals by the government rice agency pushed up the amount of debts guaranteed by the National Government on behalf of state institutions as end of September, data from the Bureau of Treasury showed.

 Debt guaranteed by the government amounted to P445.2 billion from January to September, up 7.8 percent from the P412.9 billion recorded in the first eight months of the year. 

On a year-to-year basis, guaranteed debt declined 2.4 percent from P456.35 billion.

 Guaranteed debt refers to the liabilities of state agencies which are given payment assurance by the National Government in case they fail to pay it on time.

 These obligations are not included under the official National Government data, until at least the debtor agency fails to pay. During such time, guaranteed debts are turned into assumed liabilities which the government needs to settle.

 Hence, guaranteed debts are good gauge of whether the state is being burdened by debts of its own agencies.

 The Bureau of the Treasury attributed the higher debt to the inclusion of a guarantee” to a loan by the National Food Authority (NFA). The NFA loan amounted to P32.78 billion.

 The amount was taken up by the NFA from its credit facilities with state-owned Land Bank of the Philippines and Development Bank of the Philippines, the Treasury said.

 The loaned amount, in turn, was recorded under domestic guaranteed debts that totaled P137.78 billion, 30.4 percent higher than the P105.7 billion registered as of end-August. It also represented a year-on-year increase of 5.3 percent. 

Of total domestic guarantees, the NFA loan was entered under direct guarantees or those granted automatically by the National Government. This pushed up the nine-month tally to P137.65 billion.

 Meanwhile, assumed guarantees – those taken from state financial institutions such as DBP and Land Bank – remained steady at P136 million. 

Foreign debt guarantees fell by 5.6 percent year on year to P307.42 billion.

According to the Treasury, “currency movement” increased the peso equivalent of external liabilities. The peso lost about four percent of its value against the US dollar since the end of 2014.

Broken down, direct external debt guarantees reached P303.4 billion while those assumed amounted to P4.01 billion.