Lower Treasury holdings pull down NG debt in April

MANILA, Philippines -- Higher retirement of government bonds offset a weaker peso to slightly bring down the national government's debt by the end of April, data from the Bureau of the Treasury showed.

Liabilities amounted to P5.88 trillion, down 0.3 percent from P5.9 trillion during the first quarter. Since the start of the year, debts have already been trimmed 1.2 percent.

Unlike other economic indicators compared year-on-year, obligations are tracked monthly, with borrowings added and payments subtracted from the existing debt pile.

Broken down, domestic debts led the decline at 1.9 percent to P3.77 trillion, while their foreign counterparts rose by a faster 2.7 percent to P2.11 trillion.

"The reduction in domestic obligations reflects the net redemption of government securities...offsetting the effect of peso depreciation against the US dollar," the Treasury said in a statement.

A total of P3.77 trillion in government securities were issued for the first four months, down 1.9 percent from end-March, data showed.

The government issues Treasury bonds and bills at least twice a month to borrow money from local investors. In turn, they are paid with interest for a particular period.

Borrowings are made to finance the budget deficit and pay existing debts. Aside from local papers, other forms of domestic debt such as direct loans to agencies were steady in April.

On the external front, the agency said the peso's weak performance increased the amount of foreign debts in the first four months. 

From an average of P45.99 against the dollar in the first quarter, the Treasury used a peso-dollar exchange rate of P46.89. The local currency has since appreciated 0.77 percent last Tuesday from the beginning of the year 

"The increase in external obligations was due to the weaker peso against the dollar and third currencies which caused an upward revaluation of (debts)," it explained.

"Net availments, on the other hand, added P0.14 billion to total obligations," it added.

Broken down, direct foreign loans to the government and its agencies rose four percent to P818.85 billion, data showed.

There was also a 1.9-percent uptick on the value of foreign securities to P1.3 trillion. Holdings include dollar and yen papers as well as global peso bonds.

The weaker currency also increased guaranteed debts-- which are separate from the state debt pile-- 3.5 percent to P458.12 billion as of end-April.

Guaranteed obligations are usually incurred by state corporations, but are insured by the government in case they default.