NATIONAL GOVERNMENT (NG) outstanding debt hit a record high of $13.64 trillion at the end of October.
In a statement, BTr said outstanding debt rose 0.9%, or P123.92 billion, from where it was at the end of September, mainly due to net drawdowns on local and external borrowing.
The debt stock rose 13.95% from P11.97 trillion a year ago.
The country’s debt rose 16.31% from the 11.73 trillion pesos recorded at the end of December 2021.
More than half, or 68.58%, of the total outstanding debt was from domestic sources, while the remainder was from foreign creditors.
Domestic debt rose 10.47% to P9.36 trillion by the end of October from P8.47 trillion in the same period a year ago. Month-on-month, it rose 0.59% from P9.3 trillion at the end of September.
“In October, the increase in domestic debt was mainly due to net government bond issuance of 55.83 billion pesos, while the local currency’s appreciation against the US dollar decreased by 1.25 billion pesos,” the BTr said.
Domestic debt has risen since the beginning of the year as the government continues to favor domestic financing to mitigate foreign currency risk.
Meanwhile, the external debt rose 22.34% to 4.29 trillion pesos at the end of October, from 3.5 trillion pesos a year ago.
Month-on-month, it rose 1.64% from 4.22 trillion pesos “due to the net drawdown of foreign financing of 118.71 billion pesos.”
“This was partially offset by the net favorable impact of both local and third-party currency fluctuations against the US dollar of P43.07 billion and P6.30 billion, respectively,” the BTr said.
A breakdown of the foreign debt consisted of 1.87 trillion pesos in loans and 2.42 trillion pesos in global bonds.
Year-to-date, foreign debt has increased by 20.45%, “mainly due to fluctuations in domestic and third-party currencies, which increase the peso value of foreign-currency-denominated debt securities.”
The peso closed at 57.97p against the US dollar on Oct. 28, up 1.77% from its 59p close on Oct. 3.
NG’s total guaranteed obligations fell 2.69% month-on-month to 386.53 billion pesos. Year-on-year, it also fell 9.36% from 426.46 billion pesos.
“In October, the lower level of guaranteed debt was due to the net repayment of domestic guarantees of P7.30 billion and the impact of currency fluctuations on local and third currency guarantees of P2.20 billion and P1. These were slightly mitigated by the net issuance of P0.60 billion of external guarantees,” the BTr added.
UnionBank of the Philippines, Inc. chief economist Ruben Carlo O. Asuncion said exchange rate fluctuations during the month moderated the overall rise in government debt.
“Nevertheless, I assume that the government will increase its spending towards the end of the year. Spending on projects planned for 2022 needs to be spent and fiscal momentum needs to continue as the global economy is expected to slow,” Mr Asuncion said in a Viber message.
“This can serve as an appropriate buffer and help support the country’s economic recovery efforts from the still-ongoing pandemic and challenging global economic environment,” he added.
Nicholas Antonio T. Mapa, senior economist at ING Bank NV Manila, said in a Viber message that the Philippines’ debt is likely to increase “as we still have a deficit.”
The national government’s budget deficit rose 54.08% to Ptas 99.1 billion in October, boosted by government spending. In the 10-month period, the budget deficit narrowed by 7.61% to 1.11 trillion pesos.
“The most important thing is to ensure that growth outstrips the increase in debt so that the debt-to-gross domestic product (GDP) ratio can fall,” Mr Mapa added.
Government debt as a percentage of GDP stood at 63.7% at the end of September, still above the 60% threshold mandated by multilateral lenders.
The government aims to bring the debt ratio down to 61.8% by the end of the year and to 52.5% by 2028. – Luisa Maria Jacinta C. Jocson