This image shows a Philippine peso note dated June 2, 2017. — REUTERS/Thomas White/ILLUSTRATION
By Luisa Maria Jacinta C. Jocson, reporter
The NATIONAL (NG) government’s outstanding debt rose to another record high of 13.644 trillion pesos by the end of November, the Bureau of the Treasury (BTr) said on Tuesday.
In a statement, BTr said the debt at the end of November was up just 0.02%, or 3.15 billion pesos, from the end of October’s level of 13.641 trillion pesos, “mainly due to the impact of the national currency’s appreciation against the US dollar foreign currency loans”.
Year-on-year, debt rose 14.35% from P11.93 trillion.
NG debt also rose 16.33% from the 11.73 trillion pesos recorded at the end of December 2021.
At the end of November, almost three quarters, or 69.1%, of the total outstanding debt came from domestic bonds, while the rest came from foreign creditors.
Domestic debt rose 11.69% to P9.43 trillion from P8.44 trillion a year ago. It rose 0.78% month-on-month from October’s P9.36 trillion.
“In November, net issuance of government securities added 75.76 billion pesos, while peso appreciation reduced the debt stock by 3.03 billion pesos,” the BTr said.
The peso continued to appreciate against the US dollar in November. It hit a record low of 59 pesos to the dollar on October 17.
At the end of November, the local currency appreciated 2.5% against the dollar to 56.598p from 58.047p at the end of October, based on BTr figures.
Year-to-date, domestic debt increased by 15.39% from P8.17 trillion at the end of December 2021.
The government prefers to borrow from domestic sources to mitigate foreign currency risk.
Meanwhile, the external debt rose 20.8% to 4.22 trillion pesos at the end of November from 3.49 trillion pesos a year earlier. However, it was down 1.62% from the P4.29 trillion recorded at the end of October.
The BTr said this was due to the impact of the national currency’s appreciation of Pta 106.98 billion and the net repayment of Pta 13.38 billion.
“This was mitigated by the net impact of fluctuations in the third currency against the US dollar of 50.78 billion pesos,” it added.
A breakdown of the external debt consisted of 1.87 trillion pesos in loans and 2.35 trillion pesos in global bonds.
Year-to-date, external debt increased by 18.49% from the P3.56 trillion recorded at the end of December 2021.
NG’s total guaranteed obligations rose 0.38% to P388 billion from P386.53 billion in the previous month. Year-on-year, it fell by 7.14%.
“In November, the higher level of guaranteed debt was due to the net drawdown of domestic guarantees of P1.03 billion and the net effect of currency fluctuations, which increased the value of external guarantees by P0.44 billion,” the BTr added.
UnionBank of the Philippines, Inc. chief economist Ruben Carlo O. Asuncion said NG debt could rise if the peso stops depreciating further.
“This current debt level is already higher than expected and we may see weaker fiscal stimulus at the end of fiscal 2022,” he added in a Viber message.
In December alone, the peso rose 0.8%, or 0.465p, to close at 55.755p on December 29, after closing at 56.22p on December 1st.
“This is mainly due to currency movements, which put us at a disadvantage. This will tend to decrease as the peso begins to appreciate against the dollar. As far as I know, we haven’t taken out any other significant loans,” added John Paolo R. Rivera, an economist at the Asian Institute of Management, in a Viber message.
National debt as a percentage of gross domestic product (GDP) was 63.7% at the end of September. This is still above the 60% threshold mandated by multilateral lenders.
According to the recently released Philippine Development Plan (PDP), the government aims to bring the debt ratio to 60-62% by 2023, 57-61% by 2024 and 56-59% by 2025.
Rizal Commercial Banking Corp. chief economist Michael L. Ricafort said the government should step up revenue collection and tax administration and adopt more disciplined spending to address high levels of debt.
“New taxes and higher tax rates must be fair, just and progressive, targeting in particular those who can afford them, or those in the higher income brackets, or at least avoiding the poor, most vulnerable and hardest hit sectors from additional being weighed down by the pandemic,” he said in a Viber message.
Mr Ricafort added that the outstanding national government debt could still rise, particularly if government bonds are frontloaded again in early 2023 to fund the budget deficit.
In the 11 months to November, the budget deficit shrank 7.2% to 1.24 trillion pesos.