Gov’t debt at record-high P7.94T in end-August

The national government’s outstanding debt climbed to a new record-high P7.94 trillion in August as it borrowed more that month—including a return to Japan’s samurai market—amid a weaker peso.

In a report released Friday night, the Bureau of the Treasury said outstanding obligations as of August inched up 1.73 percent from P7.8 trillion a month ago and jumped 11.8 percent from P7.1 trillion a year ago.

The end-August figure exceeded the previous peak of P7.92 trillion recorded in May, Treasury data showed.

Outstanding debt sourced locally—which accounted for the bulk or 66.41 percent of the total—rose 0.4 percent month-on-month and 15.3 percent year-on-year to P5.27 trillion at the end of the first eight months.

“For the month, the increment in the level of domestic debt was the combined effect of the net issuance of government securities amounting to P21 billion and the P630-million impact of peso depreciation on onshore dollar bonds,” the Treasury explained in a statement.

The Treasury noted that the peso weakened to 52.129:$1 at end-August from 50.865 against the greenback in July.

The government borrows more from domestic sources to minimize foreign exchange risks.

Foreign debt also increased 4.4 percent month-on-month and 5.4 percent year-on-year to P2.67 trillion in August.

“For August, the higher level of external debt was attributed to the effect of local and third-currency fluctuations, which increased the value of foreign debt by P63.45 billion and P4.64 billion, respectively. In addition, availment of foreign loans amounted to P45.31 billion for the period. The latter includes the successful issuance of $855 million (92 billion yen) worth of multiple tenor samurai bonds in the Japanese onshore market,” the Treasury said.

It was the second straight year that the Philippines ventured into the samurai debt market after an eight-year absence.

However, this year’s samurai bond sale was smaller than last year’s 154.2 billion yen sold across three tenors.

As of June, the share of total national government debt to gross domestic product (GDP) was 43.7 percent, down from 44 percent in the first quarter but up from 41.8 percent at end-2018, the latest Treasury data showed.

Economic managers had said that while the government’s nominal debt continued to rise, the debt-to-GDP ratio was a better measure as a figure below 60 percent meant the economy remained in good shape and could pay its obligations.

The Cabinet-level, interagency Development Budget Coordination Committee had programmed the debt-to-GDP figure to slightly ease to 41.4 percent this year and next. The government wanted to bring the share of debt to the economy to 38.6 percent in 2022 by sustaining strong economic growth. —BEN O. DE VERA