Gov’t outstanding debt down in May

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THE Bureau of the Treasury headquarters in Manila.

By Melissa Luz T. Lopez, Senior Reporter

OUTSTANDING DEBT went down in May as the government settled domestic loans, the Bureau of the Treasury reported on Friday.

National government debt totalled P6.833 trillion for the month, down 0.6% from the P6.875 trillion tallied as of end-April. However, the debt stock grew by 7.7% from the P6.345 trillion tallied in May 2017, data showed.

About two-thirds of the loans were sourced locally at P4.424 trillion, down 1.7% from the previous month but up 6.9% year-on-year. This came as the government settled P74.93 billion in redeemed government securities, which was partly offset by the weaker peso, which pushed debts up by P410 million.

The government has issued P4.423 trillion worth of debt papers as of May.

Meanwhile, loans from foreign sources rose by 1.4% to reach P2.408 trillion in May. The depreciation of the peso pushed the value of outstanding debts up by P37.66 billion, the Treasury said.

The peso depreciated in May to P52.554 versus the greenback, coming from the P51.734-per-dollar level in April according to exchange the rate used by the Treasury.

Outstanding external loans grew to P912.72 billion in May, to mark a 7.6% increase from a year ago.

Guaranteed obligations amounted to P492.3 billion in May, down from the previous month’s P494.445 billion as the state settled some of its domestic borrowings.

The government borrows from local and foreign sources to fund its budget deficit, which for this year is capped at 3% of the country’s gross domestic product.

Foreign currency loans granted by Philippine banks also grew as the year opened to outpace the increase in dollar deposits.

The Bangko Sentral ng Pilipinas said outstanding loans under banks’ foreign currency deposit units reached $16.359 billion, a tenth higher than the $15.374 billion recorded as of end-December and the $14.349 billion tallied in March 2017.

Only a fifth of the loans are due in less than a year worth $4.224 billion, while those with maturities of over a year reached $12.135 billion.

By source, $11.315 billion are owed to Philippine residents while $5.045 billion was borrowed from foreigners.

Bulk of the loans went to towing, tanker, trucking and forwarding (24.1%); merchandise and exporters (20.1%); public utility firms (11.4%); service producers/manufacturers, including oil companies (6.7%).

On the other hand, foreign currency deposits dropped to $38.398 billion from the $39.194 billion held by banks as of December. The loans-to-deposits ratio then increased to 42.6%, according to central bank data.

A bigger amount of foreign currency deposits stands as buffers versus external shocks and boosts the country’s dollar reserves.