The BTr said in a statement that the national government’s debt stock increased marginally in November compared to October by just 0.2 percent or P3.15 billion—mainly as the peso’s appreciation trimmed down obligations denominated in US dollars. However, total debt had increased by P1.92 trillion or 16.3 percent since the end of December 2021.
The government’s debt stock has been increasing month after month for six consecutive months since May 2021 when it was pegged at P12.496 trillion.
Government securities
Of the total outstanding obligations as of November, 31 percent or P4.22 trillion is owed to foreign lenders while 69 percent or P9.43 trillion is borrowed from domestic lenders.
“For November, the net issuance of government securities added P75.76 billion while peso appreciation trimmed P3.03 billion from the [domestic] debt stock,” the bureau said.Local borrowings increased by 0.78 percent or by P72.7 billion in November and by P1.26 trillion in the January-November period.Foreign debt market
The momentum of expansion is expected to pick up again in the coming months as managers of state coffers eye the foreign currency debt market to fund expenses that will go beyond revenues.
Based on the latest update on the fiscal program that was announced in December, the national government expects to incur a budget deficit of P1.47 trillion in 2023, down from the planned P1.5-trillion deficit in 2022.
New inflows
Meanwhile, foreign debt decreased by 1.6 percent or P69.6 billion “due to the P106.98-billion impact of the local currency appreciation and the P13.38-billion net repayment,” the BTr said.
The peso ended trading in November at 56.56:$1, gaining 1.41 from 57.97:$1 at the end of October.
This helped pare the external debt stock, along with repayment of loans having exceeded new debt inflows during November.
Still, borrowings from abroad jumped by 18.49 percent or P658.07 billion in the 11 months starting January.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said monthly change in total debt stock was almost flat amid the lack of new debt issuances and lower government borrowings in November 2022.
This was so compared to October when the government raised $2 billion in global bonds, at a time when the peso hit its historical weakest position of 59:$1.
Ricafort said higher US and global interest rates would have also increased the government’s interest rate payments and could lead to more borrowings. He added that high inflation in the Philippines could also increase the government’s expenditures, widen the budget deficit and, in turn, would lead to more government debt.
“For the coming months, the national government outstanding debt could still post new record highs in peso terms amid plans to issue new US dollar-denominated bonds, as well as US dollar-denominated retail bonds in the first quarter of 2023 worth about $3 billion, on top of the scheduled issuances of peso-denominated government securities and possible new retail Treasury bond (RTB) issuance,” Ricafort said.
Based on the latest assumptions of the Development Budget Coordination Committee, the peso-dollar exchange rate is expected to range from P54-P55 per dollar in 2020 and weaken to P55-P59 per dollar in 2023.
This was based on observations that “the peso continues to depreciate due to heightened global uncertainties and aggressive monetary policy tightening of the US Federal Reserve,” the DBCC said in December.