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Government debt rises 1.7% in May on peso weakness, bond issues

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OUTSTANDING government debt rose month-on-month in May driven by fluctuations in foreign exchange rates and an increase in foreign loans after two issues of government bonds, the Bureau of the Treasury (BTr) said.

National government debt was P7.916 trillion at the end of May, up 1.7% from the end of April and 15.8% higher year on year.

In the five months to May, overall government debt rose 8.5% from the end of 2018.

The BTr said outstanding debt grew month on month due to “net issuance 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 P5.256 trillion, up from P5.205 trillion a month earlier.

The BTr attributed the pickup to the issuance of government securities worth P50.95 billion, as well as to the P60-million revaluation of onshore dollar bonds due to peso’s depreciation.




At the end of May, the peso weakened to P52.222 against the dollar from P52.098 at the end of April.

In the five months to May, domestically sourced debt rose by 10% compared with the end of 2018.

On the other hand, external debt was P2.659 trillion, up 3% from a month earlier.

The rise in overseas debt was mainly due to the effect of fluctuations in both the dollar and third-currency denominated debt worth P6.14 billion and P10.09 billion, respectively. Net availment of foreign loans stood at P61.48 billion in May, up from P2.57 billion in April.

The government returned to offshore market twice in May, raising 750 million euros ($842.33 million) in eight-year global bonds, as well as 2.5 billion yuan ($363.3 million) in three-year “panda” bonds.

In the five months to May, external debt grew 5.7% from the end of 2018.

Meanwhile, guaranteed obligations totaled P486.16 billion in May, up 0.7% month on month.

“For the month, the increment in guarantees was due to the net issuance of domestic guarantees amounting to P49.72 billion and the impact of net appreciation of both USD and third-currency denominated guarantees amounting to P0.68 billion and P3.68 billion, respectively,” the BTr said.

It added this was offset by the net repayment of foreign guarantees worth P50.85 billion.

Total state guaranteed debt fell 0.3% 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 75-25 for 2019, from the previous year’s 65-35 ratio.

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

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