Gov’t debt declines month-on-month in June on stronger peso

THE government’s outstanding debt declined in June month-on-month on the back of loan repayments and currency fluctuations, the Bureau of the Treasury (BTr) said.

National government debt was P7.869 trillion at the end of June, down 0.6% from the end of May, though it was 12.1% higher year-on-year.

In the first half, overall government debt rose 7.9% from the end of 2018.

The BTr said outstanding debt grew month-on-month due to “net repayment of both domestic and foreign loans and foreign exchange fluctuations.”

Two-thirds of the debt stock at the end of May was held by domestic creditors at P5.295 trillion, up 0.7% from a month earlier and up 15.6% from a year earlier.

The BTr attributed the pickup to the issuance of government securities worth P38.94 billion. However, this was partially offset by the P490 million revaluation of onshore dollar bonds due to the peso’s appreciation.

At the end of June, the peso was at P51.233 against the dollar from P52.222 at the end of May.

In the first half, domestically-sourced debt rose by 10.8% compared with the end of 2018.

On the other hand, external debt was P2.574 trillion, down 3.2% from a month earlier and up 5.6% from a year earlier.

The Philippines made net repayments of foreign loans worth P39.65 billion, while the stronger peso reduced the value of foreign debt by P50.36 billion.

“These were partially offset by the effect of third-currency appreciation amounting to P4.66 billion,” the BTr added.

In the six months to June, external debt grew 2.3% from the end of 2018.

Meanwhile, guaranteed obligations totaled P486.6 billion in May, up 0.1% month-on-month.

“For the month, the increment in guarantees was due to the net issuance of domestic guarantees amounting to P5.92 billion and the effect of third-currency appreciation amounting to P0.24 billion,” the Treasury said.

It added this was offset by the net repayment of foreign guarantees worth P51.21 billion and the impact of the peso’s appreciation amounting to P4.52 billion.

Total state guaranteed debt fell 0.2% from the end of 2018.

The government plans to borrow up to P1.189 trillion in 2019 to help finance its spending. Of this year’s total, P891.7 billion will be sourced domestically and P297.2 billion from overseas.

The Development Budget Coordination Committee adjusted the borrowing ratio in favor of domestic sources to 73-27 for 2019, from the previous 75-25 ratio.

The government’s borrowing for this year is projected to come in at the equivalent of 3.2% of gross domestic product. — Karl Angelo N. Vidal