NG debt rises to P3.964 T as of June

A weaker peso and more domestic borrowings pushed up the National Government’s outstanding debt by 0.9 percent at end-June from the previous month, the Bureau of the Treasury (BTr) reported yesterday.

Total debt at the end of June was P3.964 trillion, P36.6 billion higher than the end-May level of P3.927 trillion.

At P3.964 trillion, theoretically each of the 90.4 million Filipinos is indebted by P43,805.

More than half of the government’s debt, equivalent to P2.303 trillion, was owed to local creditors, while the rest was owed to foreign lenders, the Treasury said.

Domestic debt rose 0.3 percent in June from May, and the value of foreign debt climbed 1.9 percent in the same period, due to the depreciation of the peso against the dollar and the depreciation of third currencies against the dollar.

The peso, Asia’s best performing currency last year, has reversed course and is now one of the region’s major laggards, losing almost 12 percent so far this year.

The peso depreciated to an average of 44.756 to $1 against the greenback at the end of June from 43.882 to $1 in May.

The rise in the government’s total debt was muted due to its net loan repayments worth P3 billion in the period and the P2-billion decline in contingent debt, the BTr said.

Contingent debt, mainly government-guaranteed debt issues by state-owned and state-controlled firms, slid to P524 billion in June from P526 billion in May.

The Treasury attributed the decline in the government’s foreign contingent debt due to the combined effects of the P8-billion prepayment of the National Power Corp. (Napocor) and the depreciation of the peso against the dollar.

The National Government relies heavily on foreign and local borrowings to help fund its budget deficit which is expected to reach P75 billion this year, or one percent of gross domestic product, from P12.4 billion last year.

National Treasurer Roberto Tan said the government will likely not tap the international debt markets this year and may cut its domestic borrowings for the rest of 2008 given its healthy cash position.