Gov’t’s outstanding debt in 2017 hits record-high of P6.652 trillion

The national government’s outstanding debt hit a record-high P6.652 trillion in 2017 due to a weaker peso as well as an increase in domestic borrowings last year.

In a statement Monday, the Bureau of the Treasury said outstanding obligations rose 9.2 percent from P6.09 trillion at end-2016.

Last year, domestic debt, which accounted for two-thirds of the total, climbed 12.9 percent to P4.441 trillion from P3.934 trillion in 2016.

The amount of government securities sold last year, which comprised the bulk of local debt, jumped also by 12.9 percent to P4.441 trillion from 2016’s P3.934 trillion.

Besides the usual T-bills and T-bonds being issued by the Treasury weekly, the government also sold retail treasury bonds twice last year.

To recall, the Treasury raised P255.4 billion from its sale of RTBs to small investors in December, the largest issuance to date.

In April last year, the government also raised P181.9 billion from RTBs.

During its first 18 months in office, the Duterte administration already embarked on three RTB issuances.

Meanwhile, external debt inched up 2.6 percent to P2.211 trillion in 2017 from P2.156 trillion in 2016 partly as the peso weakened last year.

The Treasury attributed the year-on-year increase in foreign debt to “P25.2-billion net issuance for the year and the effect of currency adjustments (P8.2 billion for local currency depreciation and P20.9 billion for third-currency depreciation).”

The Philippine peso slid to 11-year low levels last year.

The peso mostly weakened against the US dollar partly due to concerns on the current account deficit as a result of a surge in imports.

Based on the Bangko Sentral ng Pilipinas’ updated balance of payments (BOP) projections for 2017 released last month, it expects the current account to post a $100-million deficit, smaller than the previous projection of a $600-million deficit announced in June.

“The better-than-initially expected current account draws supports from the continued expansion in overseas Filipino remittances as well as business process outsourcing and tourism receipts,” the BSP had said.

Exports are expected to have had jumped 11 percent last year, up from the previous projection of 5-percent growth due to “the firm recovery in the global economy that has led to increased trade momentum since the second half of 2016 carrying on to 2017,” according to the BSP.

Imports, meanwhile, are seen to have had grown 10 percent in 2017.

Economic managers had said that as the Duterte administration implements its ambitious “Build, Build, Build” infrastructure program alongside expectations of sustained strong economic growth, demand for imports will remain strong in the near term.

Before 2017 ended, economic managers also raised the share of foreign borrowings in this year’s financing program on the back of the government’s upcoming foray in the Chinese and Japanese debt markets.

The Cabinet-level Development Budget Coordination Committee last December raised to 26 percent the share of external borrowings in 2018 from 20 percent previously, while it kept the 80-20 ratio in favor of domestic sources from 2019 to 2022.

Finance Secretary Carlos G. Dominguez III had said that the share of foreign borrowings for this year was increased due to the upcoming global bond sale as well as the planned “panda” and “samurai” bond issuances in China and Japan, respectively.

Dominguez had noted that 2018 would be a good time to tap global debt markets before the US Federal Reserve again hike interest rates.

This month, the Philippines sold a total of $2 billion in 10-year dollar-denominated bonds at a coupon rate of 3 percent. /je

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