Philippines debt hits P14.48 trillion in October

MANILA, Philippines — The Philippines’ debt pile climbed further to hit a new high of P14.48 trillion in October due to an increase in domestic and foreign borrowings as well as the depreciation of the peso against the dollar, according to the Bureau of the Treasury (BTr).

The end-October debt level was 1.49 percent higher than the P14.27 trillion in September. On a yearly basis, the debt stock expanded by 6.16 percent from P13.64 trillion.

For October alone, the government added P212.3 billion to the debt pile due to the net issuance and availment of domestic and external loans particularly the retail dollar bonds.

This was also exacerbated by the revaluation effect of the peso depreciation to P56.808 against the dollar during the month.

As such, the current debt stock is now 99 percent of the expected P14.62 trillion debt by end-2023.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said the debt level may reach new record highs over the coming months due to the lower maturities of government bonds in the fourth quarter until February of next year.

The recent issuance of the $1-billion maiden sukuk bond is also seen adding to the debt pile.

“The latest net borrowings of the government may reflect the need to finance the continued budget deficit partly due to higher inflation that reduced spending by consumers and businesses that also cut sales and tax collections,” Ricafort said.

Meanwhile, the Treasury said the majority or 68.38 percent of the debt pile were domestic borrowings and the remaining 31.62 percent were sourced externally.

Total domestic debt at P9.9 trillion went up by 1.73 percent on a monthly basis due to the net issuance of government securities. It also jumped by 5.85 percent from P9.36 trillion in October 2022.

Domestic debt issued reached P213.42 billion in October while principal payments amounted to P45.68 billion, resulting in a net repayment of P167.75 billion.

The Treasury said local currency depreciation against the dollar had minimal effect on debt stock valuation at only P230 million.

External obligations, on the other hand, also increased by 0.97 percent to P4.58 trillion month-on-month. It rose by 6.83 percent from P4.29 trillion on a yearly basis.

This is largely due to the net availment of foreign loans worth P33.52 billion, as well as the P11.84 billion upward adjustment in valuation caused by the depreciation of the peso against the dollar.

On the other hand, total debt guaranteed obligations declined by 0.34 percent to P361 billion due to the net repayment of domestic guarantees worth P1.35 billion.

Third currency-denominated guarantees also went down by P310 million, offsetting the P440 million additional debt valuation caused by peso depreciation.