NG debt climbs to P3.94T in August

Government debt rose 5.6 percent in August from a year earlier, as President Arroyo’s administration borrowed money to fund a budget deficit it expects to narrow to its smallest in four years in 2005.

Government debt reached P3.94 trillion in August, the Department of Finance (DOF) said yesterday.

The government forecasts a P180 billion deficit this year, 15 percent lower than the record P211 billion posted in 2002.

Domestic debt, which accounts for 53 percent of the total, increased seven percent to P2.1 trillion, the DOF said.

Foreign debt rose four percent to P1.84 trillion, 0.3 percent higher from July’s P3.93 trillion.

The Arroyo administration aims to balance the budget by 2008 to curb borrowings and cut debt. About a third of the government’s funds are used to pay interest on its obligations, according to government data.

Standard & Poor’s and Moody’s Investors Service Inc. lowered the country’s ratings earlier this year, citing its mounting debt. Both credit-rating companies lowered the nation’s outlook to negative in July, which means they are inclined to cut the ratings further.

Moody’s has a B1 rating on Philippine debt, four rungs below investment grade. S&P’s rating is one level higher than Moody’s.

The Philippines, Asia’s most frequent overseas debt seller, has sold $3.25 billion of debt overseas this year. The government sells debt to domestic investors every week through an auction.

Meanwhile, the country’s outstanding public sector debt rose to P5.5 trillion as of June this year, a 0.6-percent increase from the March level of P5.3 billion.

As a percentage of gross domestic product or GDP, the debt level fell to 107.9 percent from a 110.1-percent share in March this year.

The DOF said the P5.5-trillion debt was incurred due to an increase in NG and public corporations’ liabilities. It noted that total domestic debt declined by 2.3 percent to P1.9 trillion while total foreign debt rose by 2.2 percent to P3.6 trillion.

The non-financial public sector debt was up 2.3 percent to P4.7 trillion which is equivalent to 92.8-percent of GDP. This was due to the P22.1 billion increase in NG debt, P3.9 billion and P23.8 billion rise in liabilities of the Social Securities Institutions (SSIs) and 14 monitored non-financial government corporations (MNFGCs), respectively.