Government debt rises to record high P7.9 trillion in August

MANILA, Philippines — The national government’s debt stock rose to a fresh record-high of P7.94 trillion in end-August, following the issuance of yen-denominated bonds in the Japanese market, the Bureau of the Treasury (BTr) reported on Friday.

Latest data from the BTr showed, the national government’s outstanding debt increased by 1.7 percent as of end-August from P7.8 trillion in the previous month.

Since the beginning of the year, the total debt pile has grown by 8.9 percent from the end-2018 level of P7.29 trillion, while year-on-year, there was an 11.8 percent increase from the P7.1 trillion recorded in August of last year.

The Philippine government borrows from both domestic and external lenders to plug the expected deficit in its budget, which is capped at 3.2 percent of the gross domestic product (GDP) this 2019.

Based on Treasury data, bulk or 66.4 percent of the total debt stock as of August 31 was borrowed domestically, while the remaining 33.6 percent came from foreign creditors.

The country’s external debt, for its part, rose by 4.4 percent to P2.67 trillion last August from P2.55 trillion as of end-July.

“For August, the higher level of external debt was attributed to the effect of local and third-currency fluctuations which increased the value of foreign debt by P63.45 billion and P4.64 billion, respectively,” the Treasury said.

“In addition, availment of foreign loans amounted to P45.31 billion for the period,” it added.

The BTr said the latter includes the government’s successful fund raising activity in the Japanese market, where it was able to raise $855 million (Y92 billion) worth of multiple tenor Samurai Bonds.

In addition, foreign loans last August reached P1 trillion, as the government continues to tap multilateral agencies and development partners to help bankroll its massive infrastructure program.

Meanwhile, outstanding domestic debt likewise climbed by 0.4 percent to P5.27 trillion from the previous month’s level of P5.25 trillion.

“For the month, the increment in the level of domestic debt was the combined effect of the net issuance of government securities amounting to P21 billion and P630 million impact of peso depreciation on onshore dollar bonds,” the Treasury said.

On the other hand, Treasury data also showed that the national government’s total guaranteed obligations as of end-August increased by 1.3 percent to P490.28 billion as compared to P483.81 billion in the previous month.

“For the month, the climb in the level of guarantees was due to the net effect of local and third-currency fluctuations that increased the value of external guarantees by P5.73 billion and P3.2 billion, respectively, and net availment of external guarantees amounting to P910 million,” the BTr said. “This was tempered by the repayment of domestic guarantees amounting to P3.38 billion.”

Based on the DBM’s latest Budget of Expenditures and Sources of Financing (BESF) document, the national government’s outstanding debt is projected to grow to P7.85 trillion by the end of 2019, and continue to increase to P8.77 trillion by the end of 2020. 

Despite this, National Treasurer Rosalia De Leon had said the share of the government’s debt to the gross domestic product (GDP) is expected to remain steady at 41.4 percent by the end of 2019 and 2020.