OUTSTANDING DEBT jumped to nearly P9 trillion as of end-May, as the government issued more domestic securities and availed of additional foreign loans to fund its ongoing fight against the pandemic, the Treasury said on Tuesday.

In a statement, the Bureau of the Treasury (BTr) said the country’s debt stock hit P8.891 trillion as of end-May, up 3.4% from the P8.6 trillion as of end-April, and 12.3% higher year on year.

The BTr attributed the month-on-month rise in debt on the “increased reliance on government securities issuance and external loan availments to fund COVID-19 (coronavirus disease 2019) response amid a sharp drop in revenue collections.”

State revenues plunged 52.25% from a year ago to P151.5 billion in May, bringing the five-month total to P1.102 trillion, which was 16.1% lower year on year.

Local debt accounted for 68%, while 32% was borrowed from external lenders.

Outstanding domestic debt amounted to P6.034 trillion as of end-May, up 2.9% from P5.864 trillion seen in April. This was also 14.8% higher than the P5.256 trillion logged in May 2019.

The increase was mainly due to the issuance of more government securities in May, bringing the total to P5.733 trillion, up 3.1% month on month and 9.1% higher from the year prior.

The BTr still has an outstanding P300-billion borrowing from the Bangko Sentral ng Pilipinas’ repo facility as of May. Loans availed by state agencies and the assumed loans of the National Government were unchanged at P156 million and P792 million, respectively.

Meanwhile, the government’s external debt stock also rose 4.4% to P2.857 trillion in May, from P2.737 trillion in April. External debt climbed 7.4% from P2.659 trillion in May 2019.

Foreign loans totaled P1.138 trillion, dipping by 0.3% from P1.14 trillion in April but 15.1% higher year on year.

External debt securities, however, jumped by 7.7% from April to P1.719 trillion, which was also 2.9% bigger a year ago.

The Treasury attributed this to the global bonds issued in May as the government moved to secure funds for its COVID-19 response.

In late April, the government sold $2.35 billion in dollar-denominated global bonds: $1.35 billion in 25-year bonds with a coupon of 2.95% and $1 billion via 10-year notes at 2.457%. The bonds were issued on May 5.

The BTr also noted the peso’s weakening to P50.585 in May from P50.444 in April added P7.65 billion to the peso value of the country’s external debt.

“On the other hand, third currency adjustments trimmed P1.74 billion,” it said.

Meanwhile, total guaranteed obligations of the government as of end-May declined 2.5% to P465.877 billion from P477.682 billion in April. It was also 4.2% lower year on year.

“The lower level of guarantees was due to the net redemption of both local and foreign guarantees amounting to P10.79 billion and P0.73 billion (P730 million), respectively,” BTr said.

The total was further reduced due to currency adjustments, especially in third currencies that trimmed the value of external guarantees by around P280 million.

Of which, domestic guarantees reached P241 billion in May, down 4.3% month on month and 2.7% lower from a year ago.

External guarantees also slipped by 0.4% to P225 billion from April’s level and 5.7% lower year on year.

The country’s total debt stock, as a percentage of gross domestic product (GDP), is projected to rise to 49.8% level at the end of 2020, 51.5% in 2021 and 52.3% by 2022.

The government borrows from local and external lenders to fund its budget deficit seen to hit 8.4% of GDP this year. — Beatrice M. Laforga