National government debt hits record PHP 15.89 trillion

The national government’s (NG) outstanding debt rose to a fresh high of PHP 15.89 trillion as of end-September, but the Bureau of the Treasury (BTr) said this level is still “manageable.”

Data from the BTr on Wednesday showed that outstanding debt jumped by 2.2% to PHP 15.89 trillion as of end-September from PHP 15.55 trillion as of end-August.

“The total outstanding debt had a minimal increase of 2.2% compared to the end-August 2024 level due to the net availment of new external and domestic debt,” the BTr said in a statement.

Year on year, the debt stock increased by 11.4% from PHP 14.27 trillion a year ago.

“Nevertheless, the NG’s strategic focus on local fundraising allows the government to limit external risk exposure to only 31.19% of its debt portfolio, while enabling the development of the local bond market and providing Filipinos with quality investment vehicles to grow their savings,” the Treasury said.

The bulk, or 68.81% of the total debt stock, came from domestic sources.

As of end-September, outstanding domestic debt inched up by 1.3% to PHP 10.94 trillion from PHP 10.79 trillion in the previous month. Government securities accounted for nearly all of domestic debt.

Year on year, domestic debt increased by 12.3% from PHP 9.73 trillion.

“This (increase) was mainly driven by PHP 145.11-billion net issuance of new government securities, which was slightly offset by a PHP 460-million decrease in the value of US dollar-denominated securities due to the appreciation of the Philippine peso,” the BTr said.

Meanwhile, external debt rose by 4.2% to PHP 4.96 trillion at end-September from PHP 4.76 trillion at end-August, the BTr said. It also jumped by 9.3% from PHP 4.53 trillion in the same period a year ago.

The uptick in foreign debt was due to the P200.89 billion in net foreign borrowings, including the PHP 140.99 billion or USD 2.5-billion issuance of triple-tranche US dollar-denominated global bonds, BTr said. The transaction was finalized in September.

“Nevertheless, favorable foreign exchange adjustments contributed a substantial decrease of P2.43 billion in the overall external debt.”

The peso closed at PHP 56.017 against the US dollar at the end of September, appreciating by 16.2 centavos from its PHP 56.179 finish at the end of August.

External debt comprised of PHP 2.32 trillion in loans and PHP 2.64 trillion in global bonds.

Broken down, government securities consisted of PHP 2.25 trillion in US dollar bonds, PHP 215.23 billion in Euro bonds, PHP 59.11 billion in Japanese yen bonds, PHP 56.02 billion in Islamic certificates and PHP 54.77 billion in peso global bonds.

Meanwhile, the NG’s guaranteed obligations at end-September increased by 2.4% to PHP 372.86 billion from PHP 364.03 billion as of end-August. It also picked up by 2.9% from P362.22 billion in the same period in 2023.

“This was mainly driven by the PHP 12.3 billion in new guarantees for the Power Sector Assets and Liabilities Management Corp. (PSALM) and the National Food Authority (NFA), as well as PHP 940 million in upward revaluation of third currency-denominated guarantee,” the Treasury said.

“Net repayments of PHP 3.95 billion and P460 million downward revaluation of US dollar-denominated guarantees tempered the increase,” it added.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that the increase in debt was mainly due to increased borrowings to plug the budget deficit.

For the first nine months of 2024, the budget deficit narrowed by 1.35% to PHP 970.2 billion from PHP 983.5 billion a year ago.

“Some maturity of government securities in October 2024 and seasonally lower NG borrowings towards the end of the year in view of the Christmas holiday season could at least temper the rise in additional NG debt,” Mr. Ricafort said.

At the end of June, the NG’s debt as a share of gross domestic product (GDP) was at 60.9%, still above the 60% threshold deemed by multilateral lenders as manageable for developing economies. It aims to lower the debt-to-GDP ratio to 60.6% by the end of 2024.

The NG’s debt stock is expected to hit PHP 16.06 trillion at the end of 2024, with PHP 10.92 trillion coming from domestic sources and PHP 5.13 trillion from foreign sources. — Beatriz Marie D. Cruz