BTr: PH debt eased to P13.42T as of end-Dec

Efforts of the national government’s economic managers to lighten the country’s debt burden appear to be gaining ground as the debt stock eased to P13.42 trillion as of Dec. 31, 2022, according to the Bureau of the Treasury (BTr).

The BTr said the decrease of debt in December was mainly due to the appreciation of the Philippine peso against the US dollar as well as the redemption of securities exceeding the value of new issuances.

The year-end amount of total outstanding obligations was P225.31 billion or 1.7 percent less than the P13.64 trillion recorded a month earlier on Nov. 30.

But for the entire year, P1.7 trillion or 14.4 percent was added to the debt stock, which was pegged at P11.34 trillion at the end of 2021.

During the second semester of 2022, or the first six months of the Marcos administration, P627 billion was added to the government’s financial obligations.

The BTr said the latest debt stock level represents 60.9 percent of Philippine gross domestic product (GDP), improving from 63.7 percent at the end of September and from 62.1 percent at the end of June 2022.

Also, the improved debt-to-GDP ratio is lower than the 61.8-percent target presented in the Marcos administration’s medium-term fiscal framework (MTFF) and closer to the 60 percent that is considered manageable.

Debt sustainability

“This reflects the consistent drive to bolster debt sustainability through prudent cash and debt management backed by resurgent economic growth,” the BTr said in a statement.

The latest figures do not include the inflow of $3 billion from the government issuance of US-dollar bonds in January, as well as fresh domestic borrowings from that month.

“Our medium-term fiscal plan and exemplary GDP growth have allowed us to outpace our borrowings,” Finance Secretary Benjamin Diokno said in a statement.

“This gives us confidence that we can reach our targets by 2025,” Diokno said. Through the MTFF, the national government aims to bring down the debt-to-GDP ratio to less than 60 percent by 2025 and further down to 51.1 percent by 2028.

The plan also sets the goal of reducing the budget deficit-to-GDP ratio to 3 percent by 2028, and maintain high infrastructure spending at 5 percent to 6 percent of GDP every year. The government’s debt management strategy prioritizes the domestic market over external sources to protect the country against foreign exchange risk.

Rate fluctuations

This is particularly so considering that fluctuations in exchange rates run the risk of increasing debt service payments each time the peso depreciates.

Out of the debt stock as of end-2022, 68.6 percent or P9.2 trillion was borrowed from domestic lenders while 31.4 percent or P4.2 trillion is owed to foreign lenders.

In December, a net redemption of government securities took away P217.95 billion from the debt stock. Also, the appreciation of the peso against the US dollar shaved off P1.6 billion from the peso value of foreign currency denominated domestic debt.

Local borrowings increased by 12.7 percent or P1.04 trillion in 2022.

Meanwhile, foreign debt decreased by 0.1 percent or P5.7 billion in December due to the P58.34-billion impact of currency adjustments on foreign currency debt valuation in December.

The peso ended trading in December at 55.755:$1, gaining 80.5 centavos from 56.56:$1 at the end of November.

This offset the net impact of third-currency fluctuations against the US dollar amounting to P34.07 billion and the P18.54-billion net availment of foreign loans.

Yet, borrowings from abroad jumped by 18.3 percent or P652.34 billion in 2022. INQ