Government debt breaches P9 trillion mark in June

MANILA, Philippines — The country’s debt pile  breached the P9-trillion mark in end-June as the government continued to borrow more from domestic and foreign lenders  to fund the fight against  the coronavirus pandemic.

According to the Bureau of the Treasury (BTr), the national government’s outstanding debt as of end-June reached a new record high of P9.054 trillion, a 1.8 percent  increase from the P8.89 trillion recorded in the previous month.

The BTr attributed the increase primarily to the net issuance of domestic securities and the net availment of external loans.

On a year-to-date basis, the government’s debt stock  surged  by more than 17 percent from the end-December 2019 level of P7.73 trillion.

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

Based on Treasury data, the bulk or 68 percent of the national government’s total debt stock came from domestic lenders, while the remaining 32 percent was sourced abroad.

The country’s outstanding domestic debt amounted to P6.19 trillion, 2.6 percent up from the end-May level of P6.03 trillion “due to the net issuance of domestic government securities,” BTr said.

To date, the outstanding domestic debt has increased by P1.06 trillion or 20.7 percent since the beginning of the year.

The BTr said the country’s total domestic borrowings amounted to P1.68 trillion from January to June, while gross maturities reached P612.63 billion.

Of the total borrowings, the Treasury said P676.85 billion was raised from the issuance of Treasury bills, P387.86 billion from Treasury bonds, and P310.77 billion from retail Treasury bonds issued in February. This also includes the P300 billion short-term loan from the Bangko Sentral ng Pilipinas through a repurchase agreement.

Meanwhile, the national government’s external debt stock stood at P2.86 trillion as of end-June, 0.3 percent higher than P2.856 trillion in the previous month.

“For June, net availment of external loans amounted to P48.81 billion, which was offset by P41.50 billion mainly due to local currency appreciation,” the BTr said.

Since the beginning of the year, the national government’s external debt pile has increased by P260.33 billion or 10 percent.

The Treasury said external financing registered an inflow of P413.46 billion in the first half   vis-à-vis debt repayment of P113.46 billion.

During the period, project loans reached P11.09 billion, while program loans amounted to P216.30 billion. These include the  P53.51 billion in concessional loans from multilateral creditors, specifically for COVID-19 response.

Offshore bond issuances also amounted to P186.06 billion, P118.74 billion of which came from the government’s recent global bond sale. Another P67.33 billion was raised from the euro-bonds issuance conducted in February.

On the other hand, the national government’s total guaranteed obligations as of June decreased by 1.3 percent to P460.01 billion from P465.88 billion in the previous month.

“The lower level of guarantees was due to the net redemption of local guarantees amounting to P3.05 billion and currency adjustments which reduced the value of external guarantees by P3.79 billion,” the BTr said.