NG debt breaches P13 trillion as of end-August

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The Metro Manila skyline is seen on Feb. 2, 2022. Photo by Michael Varcas, The Philippine Star

The National Government’s (NG) outstanding debt rose to a record-high P13.02 trillion at the end of August, beating the previous high of P12.89 trillion in July, due to additional domestic borrowings and a weak peso.

Preliminary data from the Bureau of the Treasury (BTr) showed outstanding debt increased by 1%, or P133.64 billion in real terms, “attributed to the net issuances of domestic securities as well as currency adjustments.”

Year on year, the debt stock jumped by 11.8% from P11.64 trillion.

The BTr said the debt pile has risen by 11% since the year started, after the government borrowed P1.29 trillion more.

Of the outstanding debt, the bulk or 68.68% was obtained domestically, while the rest was from foreign creditors.

As of end-August, outstanding local borrowings reached P8.94 trillion, 1.3% higher than the P8.83 trillion logged in July.

“For August, the increase in domestic debt resulted from the net issuance of government securities amounting to P109.43 billion and the P1.78 billion impact of local currency depreciation against the US dollar,” the BTr said.

According to the Treasury, the peso has depreciated against the greenback to P56.171 as of end-August, from P55.322 as of end-July.

Domestic debt was 8.8% higher than the P8.22 trillion a year earlier, and 9.5% higher than the end-December 2021 level of P8.17 trillion.

“Since the beginning of the year, domestic debt portfolio has increased by P772.98 billion or 9.5% due to continued reliance on domestic borrowing to lessen the impact of currency fluctuations,” the BTr said.

In the year-to-date ending August, the BTr said the peso has depreciated by P5.171 from its P51-a-dollar close on December 31, 2021.

Most of the domestic debt stock still came from government securities with P8.94 trillion in August, up 16.4% year on year, and 1.3% month on month.

Meanwhile, outstanding external debt jumped by 19.2% year on year to P4.08 trillion at end-August. It inched up 0.6% month on month, and increased by 14.6% from the end-December 2021 level.

Broken down, it consisted of P1.83 trillion in foreign loans and P2.25 trillion in global bonds.

The incremental increase for external debt in August was also attributed to the impact of the peso’s depreciation against the dollar amounting to P62.24 billion.

“This offsets the P26.59 billion effect of third-currency depreciation against the USD and net repayment amounting to P13.22 billion,” the BTr said.

Meanwhile, overall guaranteed debt declined month-on-month by 3.7% to P392.76 billion as of end-August, and by 9.1% from the P432.22 billion as of August 2021.

In the year-to-date, guaranteed debt decreased by 7.4% or P31.16 billion.

“For August, the decrease in guaranteed debt was primarily due to the net repayment of both domestic and external guarantees amounting to P4.43 billion and P10.81 billion, respectively,” the Treasury said.

“Meanwhile, the impact of net appreciation on third currency dominated guarantees further trimmed P3.65 billion, offsetting the P3.40 billion effect of local currency depreciation,” it added.

Outstanding debt is expected to rise to P13.43 trillion by the end of 2022.

The government borrows from local and external sources to help fund a budget deficit capped at P1.65 trillion this year, equivalent to 7.6% of gross domestic product.

The country’s debt level reached 62.1% of GDP at the end of the second quarter, from 54.6% as of end-2020 and 39.6% as of-end 2019. It is expected to steadily drop to 61.8% by end-2022, and to 52.5% by 2028. — Diego Gabriel C. Robles

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