Government debt hits record P6.82 trillion

MANILA, Philippines — The national government’s debt pile reached P6.821 trillion as of end-February, hitting a new record high due to higher external borrowings and currency fluctuations during the period, the Bureau of the Treasury (BTr) reported.

According to latest data from the Treasury, the national government’s outstanding debt as of Feb. 28 rose 1.4 percent to P6.821 trillion from the end-January level of P6.726 trillion.

The BTr said 64.95 percent of the debt came in the form of domestic borrowings, while the remaining 35.05 percent were from foreign lenders.

Domestic liabilities, for its part, inched down 0.02 percent, or P920 million to P4.429 trillion from its end-January level.

The Treasury attributed the slight decrease to the net redemption of government securities — amounting to P1.28 billion — which was partially tempered by the peso depreciation — increasing the value of onshore dollar bonds by P360 million.

On the other hand, external borrowings as of end-February amounted to P2.39 trillion, 4.2 percent or P95.49 billion higher than the end-January level of P2.3 trillion.

The BTr attributed this to the net availment of foreign loans and bond issuances, as well as foreign exchange fluctuations.

According to the BTr, peso depreciation and third currency appreciation raised the value of US dollar and third-currency denominated debt by P32.59 billion and P4.76 billion, respectively.

Net availments of foreign loans and bond issuance also increased the amount of external debt by P58.14 billion.

Meanwhile, the national government’s guaranteed obligations as of end-February hit P503.68 billion, 2.9 percent higher than the P489.45 billion recorded as of end-January.

The Treasury said this is mainly due to the effect US dollar and third currency fluctuations, which increased the value of external guarantees by P4.15 billion and P3.11 billion, respectively.

In addition, the BTr said there was a net availment of domestic guarantees amounting to P290 million, while the Land Bank of the Philippines, extended P7 billion in guarantees to the Power Sector Assets and Liabilities Management Corp.

The Philippine government borrows from both domestic and external lenders to plug the expected deficit in its budget, as well as to pay maturing debt.

According to data from the BTr, the national government’s debt pile hit P6.652 trillion as of end-December 2017. This is equivalent to 42.1 percent of the country’s gross domestic product (GDP), which remained unchanged from the end-2016 level.

Going forward, the country’s economic managers expect the country’s debt-to-GDP ratio to further shrink to 36.7 percent by 2022.

For 2018, the national government is also programmed to borrow P889.51 billion from local and foreign lenders.

Of this amount, P176.26 billion will come from foreign financing, while the bulk or P711.8 billion will be borrowed domestically to minimize any foreign exchange risk for the government.