Government debt breaches P8 trillion mark in February

MANILA, Philippines — The government’s debt pile breached the P8-trillion level in February following its issuance of retail Treasury bonds (RTBs) and the settlement of euro-denominated global bonds, the Bureau of the Treasury (BTr) said.

According to latest data from the BTr, the national government’s outstanding debt as of end-February 2020 rose by 5.2 percent to a new record high of P8.17 trillion from P7.76 trillion the previous month.

BTr attributed this to the net issuance of both foreign and local government securities in February, which includes the RTB and euro bond issuances of the national government.

The government borrows from both domestic and external lenders to plug the expected deficit in its budget.

Based on Treasury data, 67 percent of the total debt pile came from domestic lenders, while the remaining 33 percent was sourced from abroad.

The domestic debt stock increased by 6.4 percent to P5.45 trillion from P5.12 trillion in January.

“The increase in domestic debt was attributed to the net issuances of government securities amounting to P326.06 billion,” BTr said.

This included the successful offering of three-year RTBs worth P310.8 billion. Of this amount, P250 billion came in the form of new investments and P60.8 billion in switch tender offers. The debt papers, which will mature in 2023, were sold at a coupon rate of 4.375 percent.

Year-to-date, domestic debt increased by 6.3 percent from the end-2019 level of P5.13 trillion.

Meanwhile, the national government’s external debt rose by 2.9 percent to P2.72 trillion from P2.64 trillion the previous month.

“External debt grew due to the effect of currency fluctuations on both dollar and third-currency denominated debt, amounting to P2.18 billion and P3.80 billion, respectively,” the Treasury said.

The BTr said there was also a net availment of foreign loans amounting to P70.19 billion, following the settlement of 1.2 billion euros worth of three-year and nine-year global bonds last Feb. 3.

The government also availed of a $100-million loan from the International Bank for Reconstruction and Development for the Social Welfare Development and Reform Project II.

According to the BTr, foreign debt has also grown by 4.3 percent as compared to the end-2019 level of P2.6 trillion.

Meanwhile, BTr said total guaranteed obligations as of February 2020 declined by 0.8 percent to P484.36 billion from P488.29 billion in January.

“The lower level of guarantees was due to the net redemption of both local and foreign guarantees amounting to P5.30 billion and P40 million, respectively,” the Treasury said.

“This was tempered by local and third-currency exchange rate fluctuations that increased the value of external guarantees by P190 million and P1.22 billion, respectively,” it added.