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NG debt hits record P13.6 trillion as of end-Oct.

THE NATIONAL GOVERNMENT’S (NG) outstanding debt hit a record high of P13.64 trillion as of end-October, driven by more domestic and foreign borrowings, the Bureau of the Treasury (BTr) said on Wednesday.

In a statement, the BTr said outstanding debt rose 0.9% or P123.92 billion from the end-September level mainly due to the net availment of local and external loans.

Debt stock increased 13.95% from P11.97 trillion a year ago.

The country’s debt level jumped 16.31% from the P11.73 trillion seen at end-December 2021.

More than half or 68.58% of the total outstanding debt was from domestic sources, while the rest was from foreign creditors.

Domestic debt went up 10.47% to P9.36 trillion as of end-October from P8.47 trillion during the same period a year ago. Month on month, it inched up by 0.59% from the P9.3 trillion in end-September.

“For October, the increment to domestic debt was primarily due to the net issuance of government securities amounting to P55.83 billion while local currency appreciation against the US dollar trimmed P1.25 billion,” the BTr said.

Domestic debt increased since the beginning of the year due to the government’s continued preference for domestic financing to mitigate foreign currency risk.

Meanwhile, external debt climbed 22.34% to P4.29 trillion as of end-October, from P3.5 trillion a year ago.

Month on month, it went up 1.64% from P4.22 trillion “due to the P118.71-billion net availment of foreign financing.”

“This was partly offset by the favorable net impact of both local- and third-currency fluctuations against the US dollar amounting to P43.07 billion and P6.30 billion, respectively,” the BTr said.

Broken down, external debt consisted of P1.87 trillion in loans and P2.42 trillion in global bonds.

Year to date, external debt rose 20.45% “primarily due to local- and third-currency fluctuations that increase the peso value of foreign denominated obligations.”

The peso closed at P57.97 against the US dollar on Oct. 28, appreciating by 1.77% from its close of P59 on Oct. 3.

NG’s overall guaranteed obligations declined by 2.69% month on month to P386.53 billion. Year on year, it also fell 9.36% from P426.46 billion.

“For October, the lower level of guaranteed debt was due to the net repayment of domestic guarantees amounting to P7.30 billion and the impact of currency fluctuation on both local- and third-currency denominated guarantees amounting to P2.20 billion and P1.79 billion, respectively. These were slightly tempered by the net issuance of external guarantees amounting to P0.60 billion,” the BTr added.

UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said foreign currency fluctuations during the month tempered the rise of overall national debt. 

“Nevertheless, I still expect the government to ramp up its expenditures as the year ends. Expenditures for projects slated for 2022 have to be spent and fiscal momentum has to continue as the global economy is expected to slow down,” Mr. Asuncion said in a Viber message.

“This can act as an appropriate buffer and help support the country’s economic recovery efforts from the still ongoing pandemic and the challenging global economic environment,” he added.

ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said in a Viber message that the Philippines will likely see debt levels rise “as we still run a deficit.”

The National Government’s budget deficit rose 54.08% to P99.1 billion in October, driven by state spending. In the 10-month period, the fiscal deficit narrowed by 7.61% to P1.11 trillion.

“The important thing is to ensure that growth outstrips the rise in debt so that the debt-to-gross domestic product (GDP) ratio can fall,” Mr. Mapa added.

The government’s debt as a share to the GDP stood at 63.7% at end-September, still above the 60% threshold prescribed by multilateral lenders.

The government is aiming to bring down the debt-to-GDP ratio to 61.8% by yearend and 52.5% by 2028. — Luisa Maria Jacinta C. Jocson

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