Gov’t outstanding debt up 13% to P3.4T in Q1

The government’s outstanding debt incurred from the sale of treasury bills and bonds in the domestic market posted a double-digit growth in the first quarter as finance officials decided not to borrow from overseas this year.

Data from the Bureau of the Treasury showed that the outstanding T-bills and T-bonds sold by the government in the domestic market reached P3.4 trillion as of the end of March, up by 13 percent from P3.01 trillion in the same period last year.

Finance Secretary Cesar Purisima earlier said the government had decided to forego its foreign, commercial borrowing program for 2013 given the significant liquidity in the country.

To help meet its expenditure requirements denominated in dollars, Purisima said, the government would simply buy dollars from local sources.

Treasury data further showed that of the outstanding liabilities from the sale of government securities, treasury bonds accounted for the bulk of P3.114 trillion.

The outstanding T-bonds have tenors of 4, 5, 7, 10, 20 and 25 years.

The balance of P289.67 billion represents the treasury bills, which are short-term government securities with maturity of three months, six months and one year.

Borrowings by the government are meant to help address the estimated budget deficit for any given year. For 2013, a budget deficit not exceeding 2 percent of the gross domestic product was programmed.

Finance officials said such an amount of deficit was manageable and would not adversely affect the country’s credit worthiness.

In the meantime, the government’s decision to source its entire commercial borrowing requirement for 2013 from the domestic market came amid the prodding by the Bangko Sentral ng Pilipinas.

The BSP said that by foregoing plans to borrow abroad would help address the problem posed by the appreciation of the peso, which exporters said had made Philippine goods more expensive and, therefore, less competitive in the global market.

Huge dollar inflows to the country, led by remittances and investments in the business process outsourcing (BPO) sector, have resulted in the continuous strengthening of the peso, which was one of the fastest appreciating currencies against the US dollar last year.

The BSP said it had no bias for or against a strong peso, but stressed that any sharp volatility was bad for the economy. As such, the BSP had engaged in heavy dollar buying last year and implemented several measures to temper the rise of the peso.

As a consequence, the BSP incurred about P86 billion in losses in the first 11 months of 2012, its income statement showed.