Government’s debt stock hits PHP 16.05T

The national Government’s (NG) outstanding debt hit P16.05 trillion at the end of 2024 amid higher debt issuances and a stronger dollar, the Bureau of the Treasury (BTr) reported on Tuesday.

Data from the Treasury showed outstanding debt rose by 9.8% or PHP 1.44 trillion from PHP 14.62 trillion at the end of 2023.

Month on month, the debt slipped by 0.2% from the record high PHP 16.09 trillion as of end-November.

“The year-end debt level closely aligned with the  2025 Budget of Expenditures and Sources of Financing projections of PHP 16.06 trillion, reflecting a minimal variance of only 0.03%,” the BTr said.

Outstanding debt as a share of gross domestic product (GDP) inched up to 60.7% as of end-2024 from 60.1% a year earlier, the Treasury said.

This was still slightly above the 60% threshold considered by multilateral lenders to be manageable for developing economies.

It was also a tad higher than the government’s 60.6% debt-to-GDP ratio target for 2024, mainly due to the “lower-than-expected full-year real GDP growth outcome of 5.6%,” the BTr said.

“Nevertheless, the minimal deviation from the programmed debt underscores NG’s effective cash and debt management strategies, including its proactive management of the level and timing of its external debt issuances amidst the volatile exchange rate environment,” it added.

The Treasury attributed the year-on-year increase in the debt stock to the “PHP 1.31-trillion net issuance of debt instruments in line with the government’s deficit program, as well as the PHP 208.73-billion valuation effect of US dollar strengthening.”

The Philippine peso in 2024 closed at PHP 57.845 versus the dollar, weakening by PHP 2.475 or 4.28% from its end-2023 finish of PHP 55.37.

Data from the BTr showed the bulk or 68.1% of total debt stock came from domestic debt, while 31.9% came from external sources.

Domestic debt rose by 9.1% to PHP 10.93 trillion as of end-December from PHP 10.02 trillion at the end of 2023. This was composed mostly of government securities.

“The net issuance of domestic securities contributed PHP 905.31 billion to the annual increase, while local currency depreciation increased the peso valuation of outstanding foreign currency-denominated domestic securities by PHP 7.18 billion,” the Treasury said.

Month on month, domestic borrowings inched up by 0.1% from PHP 10.92 trillion in November.

Meanwhile, foreign borrowings jumped by 11.4% to PHP 5.12 trillion as of end-2024 from PHP 4.6 trillion at the end of 2023.

“The year-on-year increase was mainly due to PHP 401.74 billion in net external debt availments, while the peso depreciation against the US dollar increased external debt valuation by PHP 201.55 billion,” the BTr said.

“Third-currency adjustments provided an PHP 80.74 billion downward valuation offset.”

External debt consisted of PHP 2.68 trillion in global bonds and PHP 2.44 trillion in loans.

Last year, the government raised USD 4.5 billion from the international market. It issued US dollar-denominated global bonds, raising USD 2 billion in May and USD 2.5 billion in August.

Month on month, external debt slipped by 0.9% from PHP 5.17 trillion in November “as local- and third-currency fluctuations reduced the peso valuation of foreign currency-denominated debt by PHP 66.6 billion and PHP 30.68 billion, respectively, while net availments added PHP 48.87 billion.”

As of end-December, the NG’s overall guaranteed obligations slipped by 0.8% to PHP 346.66 billion from PHP 349.44 billion in the previous year.

Month on month, guaranteed debt slumped by 17.9% from PHP 422.04 billion at end-November.

“The month-on-month decline/improvement in the NG outstanding debt is consistent with the stronger peso exchange rate versus the US dollar in December 2024 by 0.775 or 1.3% month on month to close at PHP 57.485 (vs. PHP 58.62 in November 2024),” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

“The stronger peso effectively reduced the peso equivalent of the outstanding NG foreign debt when converted to pesos,” he added.

Mr. Ricafort said outstanding debt “could go up to new record highs” after the NG’s USD 3.3-billion global bond issuance last month.

The Philippines raised USD 3.3 billion from the issuance of dollar and euro-denominated sustainability bonds in January.

The NG’s debt stock is expected to hit PHP 17.35 trillion by end-2025.

The National Government plans to borrow PHP 2.55 trillion this year — PHP 2.04 trillion from the domestic market and PHP 507.41 billion from external sources.

The government is aiming to bring down the debt-to-GDP ratio to 60.4% this year, 60.2% in 2026 and 56.3% in 2028. — A.R.A. Inosante