National debt rises to P7.1 trillion after yen bond issue

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BoT treasury

THE national government’s outstanding debt rose to P7.10 trillion in August after the government issued yen bonds, with the value of external liabilities rising due to peso’s depreciation.

The Bureau of the Treasury (BTr) said on Friday that the end-August outstanding debt was 0.86% higher compared with July and up 10.5% from a year earlier.

The current outstanding debt is equivalent to 96.86% of the P7.33 trillion projected for the year.

Of the total debt stock, 64.37% is owed to domestic lenders.

Domestic debt fell 0.6% month-on-month to P4.57 trillion in August, but rose 10.1% from a year earlier.

“For the month, the lower domestic debt was due to the net redemption of government securities amounting to P27.77 billion, slightly offset by the depreciation of the peso that increased the value of onshore dollar bonds by P0.16 billion,” the BTr said.

It said the peso depreciated to P53.475 to the dollar at the end of August from P53.160 a month earlier.

Meanwhile, external liabilities amounted to P2.53 trillion, up 3.6% from July. They rose 11% from a year earlier.

“The growth in external debt was due to net availments of foreign loans amounting to P72.30 billion including the successful issuance of Samurai bonds,” the BTr said.

The government raised a total of $1.39 billion worth of yen bonds on Aug. 8.

“Currency fluctuations in both dollar and third-currency denominated debt added P14.48 billion and P1.10 billion, respectively,” the BTr said.

The government borrows to fund its budget deficit, which it hopes to contain within 3% of gross domestic product, a rule-of-thumb level deemed prudent for such deficits.

This year, it has set a 65-35% borrowing mix in favor of domestic creditors.

The government seeks to take advantage of favorable interest rates overseas, widening the share of debt sourced externally after borrowing 26% overseas this year and 20% in 2017.

The government expects the debt as a share to the economy to decline to to 38.9% by 2022 from 42.6% in the first quarter this year. — Elijah Joseph C. Tubayan