National Government debt jumps to PHP 16.92T

The national Government’s (NG) outstanding debt hit a fresh high of PHP 16.92 trillion at the end of May as new domestic debt issuances were partly offset by the stronger peso, the Bureau of the Treasury (BTr) said on Thursday.

The latest data from the BTr showed that outstanding debt inched up by 0.99% or PHP 166.2 billion to PHP 16.92 trillion from PHP 16.75 trillion at end-April.

Year on year, outstanding debt jumped by 10.24% from PHP 15.35 trillion as of end-May 2024.   

The BTr said the “minimal increase” in total debt is mainly due to the net issuances of new domestic securities, “which reflect sustained investor confidence in the Philippine economy.”

“This was partially offset by the valuation effects of a stronger peso, helping reduce the value of external obligations,” it added.

The BTr data used a foreign exchange rate of PHP 55.615 per dollar at end-May, strengthening from PHP 55.933 per dollar at end-April and PHP 58.524 at end-May 2024.

In May, the bulk or 69.6% of the debt stock came from domestic sources, while external obligations made up the rest.

“This reflects the government’s strong bias for domestically sourced financing, which helps mitigate foreign exchange risks and strengthen the local capital market,” the BTr said.

Domestic debt, which was made up of government securities, increased by 1.64% to PHP 11.78 trillion as of end-May from PHP 11.59 trillion as of end-April.

“This increase was mainly due to net issuances totaling PHP 190.87 billion, but it was slightly tempered by the P0.91-billion downward valuation effect of a stronger peso against the US dollar,” it said.

Year on year, domestic borrowings climbed by 12.81% from PHP 10.44 trillion at end-May 2024.

On the other hand, external debt slipped by 0.46% to PHP 5.14 trillion at end-May from PHP 5.16 trillion in the previous month.

The decrease was due to PHP 3.55 billion in net repayments and the strengthening of the peso, which slashed the peso value of foreign debt by PHP 29.35 billion.

“These were partly offset by a PHP 9.14-billion revaluation resulting from third-currency fluctuations against the US dollar,” the BTr said.

Year on year, foreign debt rose by 4.6% from PHP 4.9 trillion at end-May 2024.

External debt securities consisted of PHP 2.26 trillion in US dollar bonds, PHP 239.97 billion in euro bonds, PHP 58.61 billion in Japanese yen bonds, PHP 55.62 billion in Islamic certificates and PHP 54.77 billion in peso global bonds.

Meanwhile, NG-guaranteed obligations inched up by 1.79% to PHP 343.58 billion as of end-May from the end-April level of PHP 337.54 billion.

The BTr attributed the increase to the PHP 6.53-billion net availments of domestic guarantees and the PHP 0.53-billion third-currency revaluation.

“These were partially tempered by the PHP 0.51-billion net repayment of external guarantees and another PHP 0.51-billion reduction from the stronger peso,” it added.

Year on year, guaranteed debt fell by 0.89% from PHP 350.2 billion.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said he expects the debt level to reach new highs in the next few months.

“For the coming months, the outstanding National Government debt could go to new record highs amid new National Government borrowings at the early part of the year and also the need to hedge both local and foreign borrowings of the National Government in view of the Trump factor,” he said.

The Treasury said the debt “remains manageable,” adding that the government is committed to prudent debt management strategy.

Outstanding debt as a share of gross domestic product stood at 62% at the end of the first quarter. 

The NG’s outstanding debt is projected to reach PHP 17.35 trillion by end-2025. — Aubrey Rose A. Inosante