Weaker peso increases gov’t debt burden

MANILA, Philippines —Government debt inched up in April to P15.02 trillion—equivalent to nearly P138,000 obligations per Filipino—as a weaker peso bloated the value of sovereign foreign currency-denominated liabilities.

Data released on Thursday by the Bureau of the Treasury (BTr) showed that total state obligations had gone up by P91.5 billion or 0.61 percent on a month-on-month basis. Compared with a year ago, the debt load had gotten heavier by 7.95 percent in April.

Outstanding government liabilities also remain close to the P15.2-trillion record-high debt stock recorded in February.

The BTr attributed the increase in liabilities as of end-April to “government net financing”—meaning the government had borrowed more than it settled to creditors during the period—and the impact of the falling peso, which had increased the peso value of foreign currency-denominated debts. The peso weakened by 2.4 percent against the US dollar in April.

Since the beginning of the year, total liabilities have accumulated by P401 billion or 2.74 percent.

READ: Gov’t debt stock eases to P14.93T

Dissecting the BTr’s report, domestic borrowings, which accounted for 68.64 percent of the debt stock, grew by 0.3 percent from the previous month to P10.31 trillion in April.

The uptick was due to the P27.23 billion that the government raised via its regular offerings of Treasury bills and Treasury bonds, as well as a P3.78-billion increase in the value of foreign-denominated debt securities in the local market. These pushed up the year-to-date onshore debts by P290.6 billion or 2.9 percent.

Meanwhile, outstanding external debts amounted to P4.71 trillion in April, expanding by 1.3 percent. While the state had paid P32.91 billion more than it borrowed from foreign lenders during the month, the BTr said the “considerable” weakness of the peso fattened the value of US dollar-denominated obligations by P109.31 billion.

Overseas borrowings

Since the start of 2024, offshore borrowings have piled up by P110.38 billion or 2.4 percent.

The Department of Finance announced a bigger borrowing plan for this year at P2.57 trillion from the old program of P2.46 trillion. The government is raising funds to plug a bigger-than-previously-expected budget hole of P1.5 trillion.

The larger financing program in 2024 would put sovereign debts, as a share of the economy, to 60.3 percent by the end of the year, slightly above the 60-percent threshold deemed manageable by credit rating agencies for emerging economies like the Philippines.

READ: PH debt still manageable, says finance chief

Finance Secretary Ralph Recto had said the government would remain “prudent” in its debt management by continuing to adopt a 75:25 borrowing mix in favor of domestic sources.

Such a strategy, he explained, would “mitigate foreign exchange risks, take advantage of the abundant liquidity in the country’s financial system, and support the development of the local debt and capital markets.”