PH debt hits new high of P11.07 trillion in May
MANILA, Philippines—With more domestic borrowings to finance the prolonged fight against COVID-19, the national government’s outstanding debt climbed to a new high of P11.07 trillion as of end-May.
The latest Bureau of the Treasury data released Monday (July 5) showed outstanding obligations as of last month breached the P11-trillion mark for the first time after inching up by 0.7 percent from P10.99 trillion in April and climbing 24.5 percent from P8.89 trillion in 2020.
In a statement, the Treasury said locally sourced debt, which accounted for 71.5 percent of total, rose 1.3 percent month-on-month and jumped 31.2 percent year-on-year to P7.92 trillion mainly due to the sale of more government securities.
The government ramped up the volume of its weekly treasury bills and bonds offerings in recent months as domestic sources will account for P2.6 trillion out of the P3.1-trillion total borrowings programmed for 2021.
On Monday, the Treasury sold all P15 billion in short-dated T-bills it offered even as yields rose across-the-board partly due to “lingering concerns on the Delta variant” of COVID-19 plus still above-target year-to-date inflation, National Treasurer Rosalia de Leon said.
End-May headline inflation averaged 4.4 percent or higher than the 2 to 4 percent target range, while the June rate out on Tuesday was expected to remain above 4 percent.
Ateneo de Manila University’s Ser Percival Peña-Reyes projected inflation at 4.3 percent year-on-year last month, while Moody’s Analytics’ Steven Cochrane sees 4.5 percent due to more expensive fuel.
The Treasury nonetheless awarded P5 billion each in the benchmark 91-, 182- and 364-day IOUs. The rates increased to 1.044 percent from 1.031 percent last week for the three-month debt paper; 1.351 percent from 1.332 percent previously for the six-month securities; and 1.568 percent from 1.562 percent for the one-year treasury bills, even as they were all below secondary market levels, the Treasury said.
Across the three tenors, or maturity periods, Monday’s T-bill auction attracted P49.3 billion or over three times more than the total offering.
As for external debt, the Treasury said the stronger peso helped reduce the end-May stock by 0.7 percent month-on-month to P3.16 trillion. The peso ended May at 47.725:$1 from 48.156 against the greenback in April, the Treasury noted.
On top of the peso’s appreciation, the Treasury also pointed to a net of about P220 million in foreign loans repaid last May.
However, the foreign debt pile still rose 10.5 percent from P2.86 trillion a year ago.
More new loans will be added to the Philippines’ external debt in the near term, such as the World Bank’s $200-million second financial sector reform development policy financing — the newest addition to the Washington-based lender’s pipeline of 13 forthcoming loans worth a total of $2.98 billion.
This upcoming loan will “support financial sector reforms that will assist the government of the Philippines in achieving a resilient, inclusive and sustainable financial sector,” the World Bank said, similar to the first tranche worth $400 million which it approved just last month.
