Government debt as of end-February grew to P16.63 trillion or 1.96 percent more than January’s, reflecting a faster growth rate in foreign loans.

Data from the Bureau of the Treasury (BTr) reveal this was a continued growth from P16.05 trillion as of December 2024.

The BTr on Tuesday reported domestic debt reached P11.22 trillion, higher by 1.26 percent. Meanwhile, external debt grew faster by 3.44 percent to P5.41 trillion due to government issuances of triple-tranche global bonds.

Preference for domestic debt

Nevertheless, the government maintained a preference for domestic debt, making up 67.5 percent of the total loans compared to foreign loans’ 32.5 percent.

Breaking it down, local borrowings included P140.72 billion in net financing, which resulted from higher gross government securities of P268.25 billion over redemptions of P127.53 billion.

Meanwhile, external borrowings consisted of government-issued triple-tranche global bonds amounting to $3.25 or an equivalent of P190.82 billion.

These were US-denominated bonds with 10-year and 25-year maturities and Euro bonds with another 25-year maturity.

Loans from external sources

The BTr said the government also secured around P6.48 billion from external sources to fund various projects.

These include rail projects with a P3.86-billion funding from Japan International Cooperation Agency, and physical connectivity and health projects backed by a P1.71-billion loan from the Asian Development Bank.

The International Bank for Reconstruction and Development also provided P910 million for agricultural and health projects.

However, the BTr growth in total foreign borrowings was tempered by a stronger peso against the US dollar at P57.990/$1 in February from P58.375/$1 in January. This reduced external debt by P34.48 billion, offsetting the P20.41-billion increase in third-currency debt.

Former deputy governor of the Bangko Sentral ng Pilipinas Diwa Guinigundo said the government must distribute funds more efficiently and improve investment policies to generate more income.

“Revenues are almost stagnant at 15 to 16 percent of gross domestic product (GDP) while expenditures continue to increase from 19.5 percent of GDP before the pandemic to 22.4 percent last year,” he said.

The BTr reported that total government revenues last year reached 16.72 percent of GDP or P4.4 trillion, while expenditures were higher at P5.9 trillion.

“We need to grow by about 9 percent just to resume our growth path to reach a GDP of P80 trillion by 2036 otherwise; we will still have about P20 trillion in deficit,” Guinigundo said.

Peso might appreciate this year

Security Bank chief economist Angelo Taningco added that the peso might appreciate against the US dollar this year, partly through interventions by the Bangko Sentral ng Pilipinas amid worries on global economic uncertainties from US President Donald Trump’s high tariffs on Chinese, Canadian and Mexican goods.

“We think it will appreciate once we see more clarity on the US side in terms of what will be the economic policies to be crafted by the US president,” Taningco said.