The national government’s outstanding debt slightly increased as of end-April, reaching P16.75 trillion, up 0.41 percent from the previous month, despite a strengthening peso against the US dollar.

The Bureau of the Treasury (BTr) on Tuesday said the uptick was driven by a 1.85 percent rise in domestic debt, totaling P11.59 trillion.

The BTr attributed the increase in domestic obligations to the issuance of P300 billion worth of government bonds, driven by strong investor demand.

“With economic fundamentals remaining sound, the country continues to enjoy strong market access at reasonable rates,” the Treasury said.

In April, global credit analyst Fitch Ratings affirmed the Philippines’ investment-grade credit rating of “BBB”, maintaining a stable economic outlook.

Meanwhile, external debt declined by 2.68 percent to P5.16 trillion as the local currency appreciated against the US dollar, resulting in P124.74 billion in debt savings for the government.

The government continues to rely primarily on domestic funding sources, expanding its share to 69.2 percent of the total debt portfolio, while the share of foreign loans fell to 30.8 percent.

“This is in line with the national government's thrust to reduce exposure to external vulnerabilities,” the Treasury added.

As of April, 91.7 percent of government loans were at fixed interest rates and long-term maturities, which the Treasury said "helps insulate public finances from abrupt changes in interest rates and the market environment."

Rizal Commercial Banking Corp. Chief Economist Michael Ricafort warned that global interest rates may stay elevated as investors react to the potential impact of former US President Donald Trump’s proposed tariffs and tax plan.

“The benchmark 10-year US Treasury yield is still among three-month highs at 4.43 percent due to Trump’s tax plan that could lead to a wider budget deficit and more debt,” Ricafort said.

He noted that the 10-year US Treasury yield serves as the benchmark for global borrowing costs, meaning other government and corporate bonds could rise in response.

Ricafort said Trump’s proposed 145 percent tariff on Chinese goods, as well as higher duties on steel and aluminum exports to the US (raised to 50 percent from 25 percent), could contribute to global inflation.

These developments may prompt the US Federal Reserve to maintain high interest rates, which the Bangko Sentral ng Pilipinas and other central banks may mirror to sustain healthy foreign investment and currency stability.

“Trump’s tariffs are now focused on the European Union after China, which could lead to higher US inflation and unemployment and result in a more cautious stance by most Federal Reserve officials,” Ricafort added.