Philippine debt up to new high of P7.494 trillion in January

MANILA, Philippines – As the national government borrowed more both locally and abroad in January amid good yields, its outstanding debt further rose to a new high of P7.494 trillion that month.

In a statement Monday, the Bureau of the Treasury said the 2.8-percent month-on-month rise in outstanding obligations from end-2018’s P7.293 trillion was “mainly due to net availments of both foreign and domestic loans amid efforts to take advantage of generally favorable market conditions to raise foreign and local funding.”

Year-on-year, the debt stock as of January jumped 11.4 percent from P6.726 trillion during the same month last year.

To recall, the government sold $1.5 billion in new 10-year global bonds at 3.75 percent last January, as it traditionally tapped the offshore market at the start of recent years.

Domestic debt, which accounted for 65.5 percent or nearly two-thirds of the total outstanding amount, increased 2.8 percent month-on-month and 10.8 percent year-on-year to P4.91 trillion.

The Treasury attributed the increase in locally sourced obligations from a month ago levels to “net issuance of government securities amounting to P133.18 billion, which more than offset the P200-million downward valuation of onshore dollar bonds brought about by peso appreciation.”

The peso strengthened to 52.161 against the greenback in January from 52.563:$1 last December, the Treasury noted.

Meanwhile, external debt grew 2.7 percent month-on-month and 12.6 percent year-on-year to P2.584 trillion last January.

“The [month-on-month] rise in external obligations was primarily caused by net availments of foreign loans amounting to P83.29 billion. Meanwhile, the weakening of the dollar, on one hand, decreased the peso value of dollar-denominated debt by P19.24 billion; but on the other hand, increased the peso equivalent of third currency-denominated debt by P4.63 billion, thereby resulting in a net downward revaluation effect of P14.61 billion,” the Treasury said.

Despite the rising amount of debt, its share to the growing economy was on a downtrend.

Department of Finance (DOF) Assistant Secretary Antonio Joselito G. Lambino II last week said the debt-to-gross domestic product (GDP) ratio last year was estimated at 41.9 percent, below the 42.1 percent in 2017.

“This means we are able to pay our bills,” Lambino said.

While it plans to borrow more to finance priority programs and projects, especially infrastructure, the Duterte administration expects the debt-to-GDP ratio to further decline to 38.8 percent by 2022, as economic growth will outpace higher borrowings.

The government will again sell renminbi- and yen-denominated debt paper besides another possible issue of dollar-denominated IOUs this year.

For 2019, borrowings had been programmed to exceed the P1-trillion mark, with a borrowing mix of 75-percent domestic, 25-percent external.

This year’s bigger borrowings will finance the wider budget deficit cap equivalent to 3.2 percent of GDP, while also providing funds for the Duterte administration’s ambitious “Build, Build, Build” infrastructure program.

Under “Build, Build, Build,” the government would jumpstart 75 “game-changing” projects, with around half expected to be completed during President Duterte’s term, to usher in “the golden age of infrastructure” by 2022. /kga