Outstanding debt hit record P6.501 trillion at end-October

The weaker peso lifted the government’s outstanding debt to a new record-high of P6.501 trillion at the end of the first 10 months, the latest Bureau of the Treasury data released Wednesday night showed.

The national government’s end-October outstanding obligations rose 0.9 percent from P6.444 trillion as of September as well as increased by a faster 7.1 percent from P6.069 trillion in the same 10-month period last year.

“The effect of local currency depreciation on foreign currency debt considerably affected the end-month level of national government debt,” the Treasury explained in a statement.

The peso weakened to 51.686:$1 as of end-October from the previous month’s exchange rate of 50.83:$1.

The Treasury nonetheless pointed out that despite the further increase in debt, its share to the economy or the national government debt to gross domestic product (GDP) ratio declined to 41.7 percent at end-September from 42.4 percent a quarter ago amid sustained strong economic growth.

Last month, the government reported that the GDP grew 6.9 percent in the third quarter, exceeding expectations and making the Philippines the second fastest-growing economy in emerging Asia.

The nine-month average GDP growth of 6.7 percent exceeded the 5.9-percent year-on-year increase in the government’s outstanding debt from January to September.

The debt-to-GDP ratio measures the capacity of economies to pay off debts.

As of October, domestic debt grew 0.7 percent month-on-month and 7.6 percent year-on-year to P4.216 trillion.

“Net issuance of government domestic bonds reached P27.15 billion while the P420-million impact of currency adjustments on onshore dollar bonds added to the increase in domestic debt for the month,” the Treasury said.

External debt also rose 1.3 percent month-on-month and 6.2 percent year-on-year to P2.285 trillion.

“This was due to the weakening of the peso against the US dollar, which translated to a P37.98-billion increase in the level of external debt. This more than offset the impact of net repayments amounting to P1.67 billion and third-currency depreciation against the US dollar amounting to P6.69 billion,” according to the Treasury. /je