THE NATIONAL GOVERNMENT’S (NG) outstanding debt inched up to a fresh high of P16.02 trillion as of end-October amid the peso’s depreciation against the US dollar, the Bureau of the Treasury (BTr) said.
Data from the BTr on Tuesday showed that outstanding debt went up by 0.8% or by P126.95 billion to P16.02 trillion as of end-October from P15.89 trillion as of end-September.
“The increase was primarily driven by the valuation impact of peso depreciation against the US dollar from P56.017 at end-September 2024 to P58.198 at end-October 2024,” the BTr said in a statement.
Year on year, debt jumped by 10.6% from P14.48 trillion.
Of the total debt stock, 67.98% came from domestic sources.
As of end-October, outstanding domestic debt slid by 0.4% to P10.89 trillion from P10.94 trillion at the end of September.
Government securities accounted for nearly all of domestic debt.
Year on year, domestic debt increased by 10% from P9.9 trillion.
“The decline was primarily due to the P52.65-billion net redemption of government securities, partially offset by the P6.23-billion escalation in peso conversion of US dollar-denominated domestic debt brought about by the weakened peso,” the BTr said.
Meanwhile, external debt rose by 3.5% to P5.13 trillion at end-October from P4.96 trillion at end-September, the BTr said.
Year on year, external debt increased by 12.05% from P4.58 trillion in the same period a year ago.
“The increase was driven by net foreign loan availments totaling P20.47 billion, as well as foreign exchange movements, which added P152.9 billion to external debt,” BTr said.
The Treasury said the peso depreciation against the US dollar has increased external debt by P193 billion.
“However, this has been tempered by the P40.1-billion effect of favorable third-currency movements relative to the US dollar,” it said.
External debt comprised of P2.42 trillion in loans and P2.71 trillion in global bonds as of end-October.
Broken down, government securities consisted of P2.32 trillion in US dollar bonds, P218.49 billion in euro bonds, P58.2 billion in Islamic certificates, P57.93 billion in Japanese yen bonds, and P54.77 billion in peso global bonds.
Meanwhile, the NG guaranteed obligations at the end-October increased by 10.4% to P411.76 billion from P372.86 billion as of end-September.
“This resulted from P35.85 billion in net availments of domestic guarantees and the P6.15-billion effect of peso depreciation against the US dollar, although partially attenuated by the P3.1-billion downward revaluation in external guarantees linked to third-currencies movements,” the BTr said.
Year on year, NG guaranteed obligations jumped by 14.1% from P361 billion.
“I can only surmise that the increasing fiscal deficit in the face of limited tax revenues will really ultimately result in higher NG debt from the end-Sept. level of P15.9 trillion to over P16 trillion for October,” GlobalSource country analyst Diwa C. Guinigundo said.
The Development Budget Coordination Committee on Monday raised the deficit ceiling for 2024 to P1.52 trillion, representing -5.7% of gross domestic product (GDP) from P1.48 trillion or -5.6% of GDP previously.
“In peso terms, dollar obligations will be higher including the corresponding debt servicing. If the dollar continues to strengthen relative to the peso and other currencies and revenue intake of NG remains limited, the outlook is not exactly encouraging,” Mr. Guinigundo said.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said debt remained high as the government borrowed more to fund the budget deficit.
“Weaker peso exchange rate against the US dollar by about 15% since 2022 also effectively increased the peso equivalent of US dollar- and other foreign currency-denominated debt of the National Government,” he added.
Mr. Ricafort said rate cuts by the US Fed and Bangko Sentral ng Pilipinas would help reduce debt servicing costs.
At the end of September, the NG debt as a share of GDP stood at 61.3%, higher than 60.2% a year earlier and 60.1% at end-2023.
This was still above the 60% threshold deemed by multilateral lenders as manageable for developing economies.
The government aims to lower the debt-to-GDP ratio to 60.6% by the end of 2024.
The NG’s debt stock is expected to hit P16.06 trillion at the end of 2024. — Aubrey Rose A. Inosante
