NG debt hits record P14.48T as of end-Oct.

THE NATIONAL Government’s (NG) outstanding debt reached a record P14.48 trillion as of end-October, the Bureau of the Treasury (BTr) said.

Data released by the BTr on Tuesday showed that outstanding debt went up by 1.49% from P14.27 trillion as of end-September.

“The NG’s debt stock increased by P212.13 billion or 1.49% month over month, reflecting the net issuance and availment of domestic and external loans, as well as the revaluation effect of peso depreciation against the US dollar,” the BTr said.

Year on year, the debt stock rose by 6.16% from P13.64 trillion. It also increased by 7.91% from P13.42 trillion at the end of December 2022.

As of end-October, the bulk or 68.38% of the NG’s debt portfolio came from domestic sources.

Domestic debt increased by 1.73% to P9.9 trillion from P9.73 trillion a month earlier due to the net issuance of government securities. Year on year, domestic borrowings also rose by 5.85% from P9.36 trillion in 2022.

Government securities made up almost the entire domestic debt in the 10-month period.

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

Data from the Treasury showed that the peso finished at P56.808 as of end-October, depreciating by 0.26% from P56.66 as of end-September.

Meanwhile, external debt inched up by 0.97% to P4.58 trillion from P4.53 trillion in end-September.

Foreign borrowings rose by 6.83% from P4.29 trillion in the same period a year ago.

“For October, the increase in external debt was due 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. Favorable movement of third currencies tempered the increase by P1.21 billion,” the BTr said.

Broken down, foreign debt was composed of P2.1 trillion in loans and P2.47 trillion in global bonds.

As of the end of October, the NG’s overall guaranteed obligations slipped by 0.34% to P361 billion from P362.22 billion in the previous month.

Year on year, guaranteed debt declined by 6.61% from P386.53 billion in 2022.

“The decline in the level of guaranteed debt was attributed to the net repayment of domestic guarantees amounting to P1.35 billion,” the BTr said.

“In addition, third currency-denominated guarantees declined by P0.31 billion, offsetting the P0.44-billion additional debt valuation caused by peso depreciation against the US dollar,” it added.

China Banking Corp. Chief Economist Domini S. Velasquez said that the increase in debt was “likely driven by the government’s continued spending to finance various projects and programs, as well as by the increase in domestic market interest rates during the month.”

“The new record high in the outstanding National Government debt in recent months may be attributed to continued budget deficits amid higher prices that also bloated government expenditures,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

Ms. Velasquez said the recent issuance of Sukuk bonds and tokenized Treasury bonds are expected to add to the debt stock.

“But the recent appreciation of the peso and lower market yields may help moderate the growth of outstanding debt,” she added.

Mr. Ricafort said that debt could also continue to balloon amid the government’s planned euro bond sale in the future.

The government recently raised $1 billion from its first-ever offering of Sukuk bonds, which were dollar-denominated and had a tenor of 5.5 years. 

The government also raised P15 billion from the first-ever sale of tokenized Treasury bonds, which had a coupon rate of 6.5%.

This year, the government’s borrowing plan is set at P2.207 trillion, consisting of P1.654 trillion from domestic sources and P553.5 billion from foreign sources. — Luisa Maria Jacinta C. Jocson