Outstanding debt hits fresh high of PHP 16.09T

The national government’s (NG) outstanding debt rose to a fresh high of PHP 16.09 trillion as of end-November, partly reflecting the impact of the peso depreciation on the value of foreign obligations, the Bureau of the Treasury (BTr) said.

Data from the BTr on Tuesday showed that outstanding debt inched up by 0.4% or PHP 70.7 billion to PHP 16.09 trillion as of end-November from PHP 16.02 trillion as of end-October.

Year on year, debt jumped by 10.9% from PHP 14.51 trillion.

The BTr attributed the higher debt level to “net financing and the impact of local currency depreciation on the valuation of foreign currency-denominated debt.”

The bulk or 67.87% of the total debt stock came from domestic sources.

As of end-November, outstanding domestic debt inched up by 0.3% to PHP 10.92 trillion from PHP 10.89 trillion at the end of October.

“The increment resulted from the PHP 30.67-billion net issuance of domestic securities and PHP 1.15-billion effect of peso depreciation on US dollar-denominated domestic debt,” the BTr said.

Government securities accounted for nearly all of domestic debt.

Year on year, domestic debt increased by 9% from PHP 10.02 trillion.

Meanwhile, external debt went up by 0.8% to PHP 5.17 trillion at end-November from PHP 5.13 trillion a month earlier.

“The significant depreciation of the peso led to a PHP 35.61-billion escalation in the local valuation of US dollar-denominated debt while net foreign loan availments added PHP 8.33 billion,” the BTr said.

The Treasury added that the “favorable third-currency movements” against the greenback had shrunk the external debt by PHP 5.06 billion.

Based on the data, the Treasury used a foreign exchange rate of P58.602 a dollar in November, against PHP 58.198 in October and PHP 54.77 in November 2023.

Year on year, external debt jumped by 15.3% from PHP 4.48 trillion a year earlier.

Government securities consisted of PHP 2.34 trillion in US dollar bonds, PHP 213.72 billion in euro bonds, PHP 59.32 billion in Japanese yen bonds, PHP 58.6 billion in Islamic certificates and PHP 54.77 billion in peso global bonds.

Meanwhile, NG-guaranteed obligations rose by 2.5% to PHP 422.04 billion at end-November from PHP 411.76 billion in October.

“This resulted from PHP 8.95 billion in new domestic guarantees, as well as PHP 1.85 billion in upward adjustments brought about by unfavorable foreign currency movements,” the BTr said.

Year on year, NG-guaranteed obligations jumped by 19.51% from PHP 353.14 billion.

The peso closed at PHP 58.62 a dollar at the end of November, weakening by 52 centavos from the PHP 58.1 finish at end-October. It also hit a record low PHP 59-a-dollar level on Nov. 21 and 26.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the government had to borrow more to fund persistent budget deficits.

The National Government’s budget deficit widened to P1.18 trillion in the first 11 months from P1.11 trillion a year earlier.

“Tax and fiscal reform measures would be realistically needed to bring down the country’s debt-to-GDP ratio to below the 60% international threshold to help sustain the country’s relatively favorable credit ratings of one to three notches above the minimum investment grade as consistently maintained since the pandemic,” Mr. Ricafort said.

At the end of September, the NG debt as a share of GDP stood at 61.3%, higher than 60.2% a year earlier and 60.1% at end-2023.

Mr. Ricafort said rate cuts by the Bangko Sentral ng Pilipinas and US Federal Reserve might help reduce debt service in the coming months.

Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera said the PHP 16.09-trillion debt remains “manageable” but has to be coupled with “prudent” fiscal management, more efficient tax collection and a broader the tax base.

“For December 2024, the year-end budgetary requirements and adjustments might have pushed debt levels slightly higher. However, seasonal remittances and higher government revenues in December 2024 could have helped cushion the deficit,” Mr. Rivera said.

For 2025, he said the NG is expected to balance its fiscal needs with “careful borrowing strategies,” such as leveraging concessional loans and managing foreign exchange exposure.

The NG’s debt stock is expected to have hit PHP 16.06 trillion at the end of 2024 and PHP 17.35 trillion for 2025. – Aubrey Rose A. Inosante, Reporter