MANILA, Philippines — September marked a blip on the government’s rising debt pile after liabilities with the central bank were settled, a temporary reprieve that risks reversing this month with fresh cash from the Bangko Sentral ng Pilipinas (BSP).
Outstanding debt eased from a record-high and declined to P9.37 trillion as of last month, down 2.6% from August level, the Bureau of the Treasury reported on Thursday.
The decline was a direct result of the Duterte administration returning the BSP’s P300-billion placements in Treasury bonds after they matured. That amount was invested way back in March to give the government cash for 3 months, but was refreshed for another quarter following the law.
Settling BSP dues easily subtracted 4.1% in the value of domestic debts that dropped to P6.54 trillion last month. Lending from the central bank was recorded as a direct loan which plummeted to just P156 million after the settlement.
That said, the decrease is likely to be brief. As soon as giving back the P300 billion BSP invested last September 29, government applied for fresh borrowings worth P540 billion from monetary authorities, this time in the form of advances, meaning direct cash infusions instead of investing the money in bonds.
What’s more, most other form of liabilities sustained their increase last month, consistent with the Duterte administration’s reliance on debt to raise cash for a costly pandemic response, while financing typical state operations. As it is, government projects the debt pile to rise to P10.16 trillion by yearend.
For instance, debt funneled through Treasury bonds and bills, which are issued weekly, inched up 0.4% month-on-month to P6.44 trillion, data showed. Assumed loans were steady at P792 million.
Foreign debts recorded a faster 1% increase in September from August to P2.93 trillion. Under this segment, external loans availed from other countries or multilateral institutions like the World Bank and Asian Development Bank rose a faster 2.6% to P1.27 trillion.
Meanwhile, absent any foray into the foreign bond market, the value of foreign-denominated securities dipped 0.2% month-on-month to P1.66 trillion. Broken down, 98.6% or P1.28 trillion of these bonds were denominated in US dollar.
The balance was shared by bonds in euro, yen, yuan and global peso, figures showed.
The government typically borrows from local and foreign investors to bridge its budget deficit and pay up old dues. But this year, liabilities ballooned after the pandemic messed up with a budget plans that did not foresee the health crisis pulling down tax receipts from shuttered businesses closed down and stay-at-home consumers this year.