RTB sale pushed PH debt to new high of P7.8 trillion in March

MANILA, Philippines — After the successful sale of retail treasury bonds (RTBs) in March, the national government’s outstanding debt further climbed to a new high of P7.8 trillion at the end of the first quarter.

In its latest report, the Bureau of the Treasury said outstanding liabilities as of March rose 7 percent from P6.9 trillion a year ago and 4.7 percent from P7.5 trillion a month ago.

Since the start of 2019, the national government accumulated an additional P509.8 billion in debt, up 7 percent from the end-2018’s P7.3 trillion.

Two-thirds of the debt stock were borrowed locally.

Domestic borrowings jumped 16.4 percent year-on-year, 8.8 percent year-to-date, and 6.1 percent month-on-month to P5.2 trillion.

“For the month, the increment in the level of domestic debt was caused by the net issuance of government securities amounting to P298.2 billion and the P430 million revaluation of onshore dollar bonds brought about by peso depreciation,” the Treasury said in a statement, noting that the peso weakened to 52.629:$1 at end-March from P51.769 against the greenback in February.

To recall, the Treasury issued P235.9 billion in five-year RTBs last March at a coupon of 6.25 percent following strong demand from small investors and availability online.

It was the Duterte administration’s fifth RTB sale during its first three years in office, as the government wanted to borrow more partly to finance the massive infrastructure projects under its ambitious “Build, Build, Build” program.

Also, external debt increased 8 percent year-on-year, 3.6 percent year-to-date, and 2 percent month-on-month to P2.6 trillion as of end-March.

“The higher external debt for the month was principally due to the impact of local currency fluctuation against the US dollar amounting to P42.4 billion and net availment of foreign loans amounting to P11 billion. Meanwhile, net depreciation on third-currency denominated debt carved out P1.4 billion,” the Treasury explained.

At the end of the first quarter, the national government’s outstanding guaranteed debt inched up 1.3 percent month-on-month to P479.7 billion “due to the net issuance of domestic guarantees amounting to P2.8 billion and currency fluctuations on both local and third currencies, which increase the peso value of external guarantees amounting to P4.7 billion and P420 million, respectively” even as net repayments on external guarantees offset P1.6-billion worth of obligations, the Treasury said.

Outstanding guaranteed debt nonetheless declined 4.4 percent year-on-year and 1.6 percent year-to-date.

Last year, the share of debt to gross domestic product (GDP) stood at 41.9 percent, and the Cabinet-level, interagency Development Budget Coordination Committee (DBCC) expects the debt-to-GDP ratio to remain at the same level this year.

While the government was seeking more foreign financing for its big-ticket infrastructure projects, the bulk of the annual national budget was being funded by local borrowings, mainly from the sale of treasury bills and bonds.

“The medium-term financing program will continuously favor domestic sources with a 75-25 split between domestic and external borrowings, to mitigate foreign exchange risks while contributing to the development of the domestic capital market,” such that “national government debt is projected to maintain its downward course to 38.8 percent of GDP by 2022, anchored on the government’s sustainable fiscal strategy and faster economic expansion,” the Department of Budget and Management (DBM) said in a recent report.  /muf