Government debts swell to P8.89 trillion

MANILA, Philippines — The country’s debt pile further swelled to P8.89 trillion in May as the government continued to increase its borrowings both from domestic and international sources to fund its coronavirus response efforts.

According to the latest data from the Bureau of the Treasury (BTr), outstanding debt as of end-May reached a new record high of P8.89 trillion, 3.4 percent up from P8.6 trillion in the previous month.

The BTr said this was “primarily due to the increased reliance on government securities issuance and external loan availments to fund COVID-19 response amid a sharp drop in revenue collections.”

Compared to the end-December 2019 level of P7.73 trillion, the national government’s debt portfolio has grown by 15 percent as of May.

The government borrows from both domestic and external lenders to plug the expected deficit in its budget, which is now expected to widen to P1.613 trillion or 8.4 percent of the gross domestic product (GDP) due to COVID-19.

Treasury data showed that the bulk or 68 percent of the national government’s total debt stock was borrowed domestically, while the remaining 32 percent was sourced from external lenders.

Domestic debt, in particular, climbed by 2.9 percent to P6.034 trillion as of end-May from P5.86 trillion in the previous month.

The BTr attributed the increase to the net issuance of domestic government securities during the review period.

Government debt papers fetched lower rates amid strong demand, allowing the BTr to make full awards during auctions and even upsize the awarded volume in May.

The national government’s external debt likewise rose by 4.4 percent to P2.86 trillion from P2.74 trillion in the earlier month.

“For May, net availment of external loans amounted to P114.01 billion as part of continued government efforts to secure financing for the COVID-19 response,” the BTr said.

Treasury data showed that outstanding external debt securities as of May 31 rose by 7.7 percent to P1.72 trillion from P1.6 trillion in April, mainly due to an increase in dollar bonds.

The Philippines was able to raise $2.35 billion worth of 10-year and 25-year global bonds, priced at the lowest coupon rate ever achieved for these debt papers.

Of the amount, $1 billion came from 10-year global bonds, which fetched a coupon rate of 2.457 percent. Another $1.35 billion was raised from the sale of 25-year global bonds, priced at 2.95 percent.

Meanwhile, the Treasury said the national government’s guaranteed obligations as of May declined by 2.5 percent to P465.88 billion from P477.68 billion in the previous month.

“The lower level of guarantees was due to the net redemption of both local and foreign guarantees amounting to P10.79 billion and P730 million, respectively,” the BTr said.