OUTSTANDING government debt rose to record levels in March following the issuance of retail Treasury bonds during that month and amid a weaker peso, the Bureau of the Treasury (BTr) said.

National government debt was at a record P7.802 trillion at the end of the first quarter, up 4.7% from February and 13.4% from the same period last year.

Year to date, government debt increased by P509.76 billion or 7% from the end of 2018.

Two-thirds of the debt stock at the end of March came from domestic sources — P5.197 trillion, up 6.1% from the previous month.

The Treasury attributed this to the net issuance of government securities in March worth P298.21 billion as well as the revaluation of domestic dollar bonds to P430 million after the peso weakened.

At the end of March, the peso depreciated to P52.629 against the dollar from P51.769 at the end of the previous month.

The government raised a net P235.935 billion from its latest offering of five-year RTBs following a two-week offer period running to March 8.

The retail bonds are targeted at institutional and individual investors, with a yearly interest rate of 6.25%.

Year-to-date, domestically-sourced debt rose by P419.96 billion or 8.8% from P4.777 trillion at the end of 2018.

On the other hand, funds raised from foreign sources accounted for P2.605 trillion of the total, up 2% from end-February’s level of P2.553 trillion.

The rise in overseas debt was mainly due to the impact of a peso fluctuation against the dollar worth P42.42 billion as well as foreign loan availments worth P11 billion during that month.

This however was tempered by the net depreciation of third-currency debt, carving out P1.36 billion.

So far this year, external debt increased by P89.79 billion or 3.6% from its end-December level of P2.516 trillion.

Meanwhile, guaranteed obligations stood at P479.67 billion in March, up 1.3% or P6.3 billion month-on-month.

“This was due to the net issuance of domestic guarantees amounting to P2.79 billion and currency fluctuations on both local and third currencies, which increase the peso value of external guarantees amounting to P4.73 billion and P0.42 billion, respectively,” the BTr said.

Net repayments on external guarantees amounted to P1.64 billion.

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 borrows from domestic and foreign sources to fund its budget deficit, which for this year is projected at 3.2% of gross domestic product. — Karl Angelo N. Vidal