FX volatility, new borrowings raise H1 gov’t debt

FOREIGN currency fluctuations and new local borrowings pushed the national government’s debt level higher at the end of the first half of 2016, the Department of Finance (DOF) said over the weekend.

In a statement, the DOF said that data from the Bureau of the Treasury (BTr) put the government’s total outstanding obligations at P5.948 trillion at the end of June.

This represented an increase in the government’s debt stock by P62.41 billion compared to the end-May level of P5.886 trillion, according to the report of National Treasurer Roberto Tan to Finance Secretary Carlos Dominguez III.

Despite this slight increase due to foreign exchange adjustments and new domestic debt issuances, the total national government debt was still slightly lower than the P5.955 trillion recorded at the end of 2015, according to Tan.

Total domestic debt amounted to P3.828 trillion, representing an increase of P31.25 billion over the previous month’s level of P3.797 trillion, and accounting for 64.4 percent of outstanding liabilities.

According to BTr’s data, the issuance of government securities in June—net of those debt repaid—and the depreciation of the peso against the US dollar contributed to the growth in domestic obligations equivalent to P31.12 billion and P130 million, respectively.

Nevertheless, the domestic debt level has fallen by 1.4 percent or P55.88 billion since the beginning of the year.

On the other hand, the government’s external debt stood at P2.120 trillion, or P31.15 billion higher compared to the end-May 2016 level of P2.088 trillion.

The increase in external liabilities was the combined effect of currency fluctuations on US dollar—and third currency—denominated debt that raised the peso value of outstanding obligations by P12.65 billion and P21.64 billion, respectively. These outpaced net repayments amounting to P3.14 billion.

To date, the external debt stock has increased by 2.4 percent or P49.35 billion over the last six months.

Meanwhile, state-guaranteed debt was adjusted to P563.28 billion as of June 2016 from its previous level of P448.20 billion in May 2016.

“The change is primarily due to the adjustment and reconciliation of outstanding guarantees extended by the national government,” Tan said.

Forex fluctuations against the US dollar and third currencies further increased the peso value of external guaranteed debt by P1.85 billion and P9.70 billion, respectively.

This was tempered by net repayments on government’s domestic guarantees with that of the National Food Authority amounting to P1.58 billion from its credit line with the Land Bank of the Philippines and the Development Bank of the Philippines, and repayment on external guarantees amounting to P1.26 billion.

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