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Wednesday, December 6, 2023

Weak peso, more borrowings raised gov’t debt to record P14.35t in August

The government’s outstanding debt increased to a record P14.35 trillion as of end-August 2023 from P14.24 trillion a month earlier on weaker peso against the US dollar, the Bureau of the Treasury said Monday.

“The P105.28 billion or 0.7-percent increment from the previous month’s level was primarily due to the peso depreciating from 54.834 to 56.651 against the US dollar over the reference period,” the Treasury said in a statement on its website.

It said of the total debt stock, 31.8 percent came from external sources and 68.2 percent from domestic borrowings.

Michael Ricafort, the chief economist of Rizal Commercial Banking Corp., said the record government debt could also be attributed to wider budget deficits amid higher inflation that also bloated government expenditures and higher interest rates that raised borrowing costs of the government.

“Tax and fiscal reform measures would help narrow the country’s budget deficit and also curb the increment in the outstanding national debt, going forward,” Ricafort said.

Data showed that domestic debt as of end-August settled at P9.79 trillion, P21.24 billion or 0.2 percent lower than the previous month on large retail bond maturities.

New domestic debt issued in August totaled P229.29 billion with debt redemption of P253.43 billion, resulting in a net repayment of P24.14 billion. This was partially offset by the P2.90 billion incremental value caused by peso depreciation on foreign currency-denominated domestic securities.

The Treasury said from the end-December 2022 level, domestic debt increased by P582.74 billion or 6.3 percent.

The external debt of P4.56 trillion was P126.52 billion or 2.9 percent higher month-on-month, mainly because of the weaker peso.

“Peso depreciation against the US dollar caused a P146.85-billion upward revaluation of US dollar-denominated debt in August, although partially offset by the P22.11 billion downward revaluation of the third-currency debt component,” it said.

Net availment of foreign loans also added P1.78 billion to the reference month’s external debt stock.

External debt of also increased by P347.98 billion or 8.3 percent from the end-December 2022 level.

Total national government guaranteed obligations rose by P3.18 billion or 0.9 percent month on month to P366.58 billion as of end-August 2023.

“The higher level of guaranteed debt is attributed to the net availment of domestic guarantees amounting to P2.44 billion and the P4.03 billion revaluation effect of peso depreciation on external guarantees surpassing the P3.29 billion in repayments,” the Treasury said.

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