Government debt steps up by 0.65%

MANILA, Philippines — Higher issuance of government papers and the peso depreciation pushed up the Aquino administration’s debt pile in the first three quarters of the year, latest data from the Bureau of Treasury showed.

As of September, the national government owed P5.936 trillion, up 0.65 percent from P5.898 trillion in the first eight months. Compared to the same period a year ago, liabilities increased 3.72 percent from P5.723 trillion.

Increases were recorded on both domestic and foreign debts, data showed.

Domestic liabilities, which accounted for bulk of obligations, rose 0.7 percent to P3.883 trillion from the previous month. They were up 3.72 percent from the previous year.

"The month-on-month increase was due to the P27.02 billion net issuance of government securities and... upward adjustment in the local valuation of multi-currency debt," Treasury said in a statement.

The government borrows from the domestic market every two weeks through Treasury bonds and bills issued to investors.

T-bonds are longer-term in nature, while T-bills are shorter dated payable within a maximum of one year.

From January to September, T-bonds and T-bills issued amounted to P3.883 trillion, a slight increase of 0.7 percent from end-August. Issuances were up 3.29 percent from last year’s P3.759 trillion.

Other segments of domestic debt remained steady from end-August: direct loans to state agencies amounted to P156 million, while assumed liabilities from government-owned and –controlled institutions reached P442 million.

Meanwhile, foreign debts totaled P2.053 trillion during the first nine months, figures showed. They were up 0.54 percent from the first eight months and by a faster 4.53 percent from a year ago.

"The month-on-month increase was mainly a reflection of peso depreciation wherein the local value of dollar and third-currency-denominated debt escalated," the Treasury said.

A weaker currency means the country will need to shell out more pesos to settle liabilities in foreign units.

According to the Treasury, foreign obligations were computed using a 46.95 to a dollar exchange rate in September, weaker than 46.70 in August and 45 last year.

As a result, foreign loans inched up 0.59 percent to P754.02 billion month-on-month. From last year, they rose 4.73 percent.

The value of foreign debt papers also went up by the same monthly pace to P1.299 trillion. This represented an increase of 4.41 percent year-on-year.

The government borrows from the domestic and foreign markets to bridge its budget deficit programmed to hit P283.7 billion this year. As of August however, the deficit— which means more revenues were spent than earned— totaled only P3.41 billion.

The narrow budget gap has allowed the government to instead borrow funds to replace debts with high interest and short payment terms with longer-dated and low-yielding ones.