Gov’t ends 2014 with slightly higher outstanding debt of P5.735T

MANILA, Philippines–The government’s outstanding debt inched up by 1 percent to P5.735 trillion at the end of last year, the Bureau of the Treasury (BTr) reported last Friday.

In a statement posted on its website, the BTr attributed the slightly higher debt figure to the additional issuance of domestic debt paper. The agency also noted that foreign debt declined last year.

Last year, domestic debt rose to P3.821 trillion—up 2.3 percent from the P3.733 trillion seen in 2013. The end-December figure was 0.8-percent higher than November’s P3.789 trillion. The share of outstanding debt from domestic sources also increased to 66.6 percent of the 2014 total, from 65.7 percent in 2013.

External debt, meanwhile, reached P1.915 trillion in 2014—down 1.7 percent from the P1.948 trillion posted in 2013. The December figure was 0.6 percent lower than the P1.927 trillion seen in November. The BTr attributed the lower foreign debt to “revaluation caused by adjustments in third currencies.”

The BTr also reported that the ratio of the government’s debt to the economy had improved, dropping to 45.4 percent at end-2014 from the 49.2 percent registered the previous year. The narrower debt to gross domestic product (GDP) ratio came on the back of “increased sustainability of public finances,” the BTr said.

“The improvement in the country’s debt ratio could be attributed to the combined effects of strong economic growth and the marginal increase in nominal debt brought about by reduced borrowings due to the lower deficit turnout,” it added.

Also, the decline in the debt ratio came alongside improvements in other debt metrics, the BTr said.

“Consistent with the share of domestic debt, the currency mix of the national government’s obligations indicate a moderate exposure to unfavorable foreign exchange swings as peso-denominated obligations account for 68 percent of the total; followed by US dollar, yen, and euro [bonds/notes] at 25 percent, 5 percent, and 1 percent, respectively,” it said.

As for debt maturity, the BTR said it stood at “accommodating levels mitigating the need to immediately refinance debt over the near-term.”

The cost of servicing debt also went down as the weighted average interest rate (WAIR) for domestic obligations slid to 5.7 percent in 2014 from 5.8 percent in 2013, while external liabilities’ WAIR dropped to 4.8 percent in 2014 from 5.1 percent the previous year.