Phl’s debt at new record high in October

The Philippines' outstanding debt went up to a new record high in October following additional domestic and international borrowings to fund state financing requirements, the Bureau of the Treasury said Tuesday.

In a statement, the state treasury bureau said debt stock grew by 6.15 percent year-on-year to P14.48 trillion from P13.64 trillion last October 2022

Month-on-month, the country's debt increased by 1.49 percent from P14.27 trillion as of September 2023.

The increased debt stock "reflected the net issuance and availing of domestic and external loans, as well as the revaluation effect of peso depreciation against the US dollar," the Treasury explained.

Data broken down: the country acquired 68.38 percent of the overall debt from its domestic sources, with the remaining 31.62 percent obtained from foreign sources.

The country's domestic debt also reached P9.90 trillion, marking a 1.73 percent increase from P9.73 trillion by the end of September due to the government's issuance of debt securities to enhance its financial reserves.

Gross issuance of domestic debt for October reached P213.42 billion, while principal payments amounted to P45.68 billion, resulting in a net repayment of P167.75 billion.

The effect of local currency depreciation against the US dollar on the
debt stock valuation was minimal at only P0.23 billion.

Meanwhile, the Treasury Bureau attributed the increase in external debt to the net availment of foreign loans amounting to P33.52 billion and the P11.84 billion upward adjustment in valuation caused by peso depreciation against the US dollar.

Rizal Commercial Banking Corp. chief economist Michael Ricafort – in an emailed commentary – attributed the new record high in the outstanding national government debt to continued budget deficits, higher interest rates, weaker peso exchange rate vs. the US in recent years that increased the peso equivalent of the government's foreign debts, continued increase in infrastructure spending.

He likewise said that the national government's outstanding debt could still post new record highs for the coming months amid reduced maturities of government bonds in the fourth quarter (4Q) of 2023 up to February 2024

"For the coming months, especially in 4Q 2023 up to February 2024, relatively lower maturity of government debt (the repayment of which tends to reduce the national government outstanding debt) and any continuation of budget deficits that need to be financed could lead to additional/incremental borrowings that could, in turn, lead to a new record high for the outstanding national government debt," Ricafort said.