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NG debt rises in April on weak peso

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By Luisa Maria Jacinta C. Jocson, Reporter

THE NATIONAL Government’s (NG) outstanding debt returned to the P15-trillion level as of end-April due to the weaker peso, the Bureau of the Treasury (BTr) said.

Data from the BTr on Thursday showed outstanding debt rose by 0.61% to P15.02 trillion as of end-April from P14.93 trillion as of end-March.

“Total debt increased by P91.5 billion or 0.61% from the end-March 2024 level due to government net financing and the impact of local currency depreciation on the valuation of foreign currency-denominated debt,” the BTr said.

Year on year, the outstanding debt stock jumped by 7.95% from P13.91 trillion in the same period a year ago.

Of the total debt, more than two-thirds or 68.64% came from domestic sources.

As of end-April, outstanding domestic debt edged higher by 0.3% to P10.31 trillion from P10.28 trillion as of end-March. It also increased by 8.99% from P9.46 trillion in the same period a year earlier.

Government securities made up almost the entire domestic debt as of end April.

“For the month, the increment resulted from the P27.23-billion net issuance of government securities and the P3.78-billion effect of peso depreciation on foreign currency-denominated domestic debt,” it said.

Data from the BTr showed the peso closed at P57.583 against the dollar at end-April, weakening by P1.323 from its P56.26 finish a month ago.

Meanwhile, external debt went up by 1.3% to P4.71 trillion as of end-April from P4.65 trillion as of end-March. Year on year, foreign debt rose by 5.74% from P4.45 trillion.

“Although there was a net repayment of P32.91 billion in foreign loans within the month, the considerable depreciation of the peso caused a P109.31-billion upward adjustment in the local valuation of US dollar-denominated debt, partly offset by the P15.91-billion downward adjustment brought about by the opposite movement of third-currency debt,” the BTr added.

External debt was composed of P2.25 trillion in loans and P2.46 trillion in global bonds.

Broken down, global bonds consisted of P2.07 trillion in US dollar bonds, P212.85 billion in euro bonds, P64.03 billion in Japanese yen bonds, P57.58 billion in Islamic certificates and P54.77 billion in peso global bonds.

Meanwhile, the NG’s guaranteed obligations stood at P356.06 billion as of April, up by 2.89% from P346.04 billion in March. However, it dropped by 6.47% from P380.69 billion in the same period in 2023.

“The increment was due to the net availment of domestic guarantees amounting to P7.54 billion and the impact of peso depreciation on foreign currency-denominated guarantees amounting to P3.8 billion,” the BTr said.

“On the other hand, third-currency adjustments against the US dollar trimmed P1.32 billion,” it added.

Analysts noted that the peso depreciation contributed to the increase in debt as of end-April.

“This 0.61% increase from March is due to a combination of government borrowing and a weaker peso. Domestic debt grew slightly, impacted by new government security issuances and peso depreciation,” Security Bank Corp. Chief Economist Robert Dan J. Roces said in a Viber message.

Mr. Roces said the higher external debt was “primarily due to the peso’s depreciation inflating the value of dollar-denominated debt, outweighing a small decrease from other currencies.”

In mid-April, the peso sank to the P57-per-dollar level for the first time since November 2022, which was also its worst close in 17 months at the time.

“Weaker peso exchange rate over the past two years could have also increased the peso equivalent of foreign debt,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Mr. Ricafort said that outstanding debt could rise further after the government’s dollar bond issuance in May and other planned borrowings for the rest of the year.

The Philippine government raised $2 billion from its dual-tranche dollar bond issuance in May, its first global bond sale for the year.

The government’s borrowing program is set at P2.57 trillion this year, of which 75% will come from domestic sources and the rest from foreign sources.

As of the first quarter, the NG’s debt as a share of the gross domestic product (GDP) stood at 60.2%. This was below 61.1% a year ago but higher than 60.1% at the end of 2023.

The government’s debt-to-GDP ratio target this year is set at 60.3%. It seeks to bring this down further to 55.9% by 2028.

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