By Luisa Maria Jacinta C. Jocson, Reporter

THE NATIONAL Government’s (NG) outstanding debt slipped to P14.27 trillion as of end-September due to the net redemption of foreign and domestic debt, the Bureau of the Treasury (BTr) said.

Data from the BTr showed that outstanding debt dipped by 0.6% from P14.35 trillion as of end-August.

“The amount underscores a decline of P80.9 billion or 0.6% from the previous month’s level primarily due to net repayments of both domestic and external obligations for the month,” the BTr said in a press statement on Tuesday.

National Government outstanding debtYear on year, NG debt stock rose by 5.6% from P13.52 trillion.

Outstanding debt increased by 6.3% from P13.42 trillion as of end-December 2022.

The bulk or 68.2% of the NG’s debt portfolio came from domestic sources.

Domestic borrowings went down by 0.6% to P9.73 trillion as of end-September from P9.79 trillion a month earlier due to the net redemption of government securities.

Year on year, domestic debt went up by 4.7% from P9.3 trillion in the same period a year ago.

The domestic debt mix consisted almost entirely of government securities in the nine-month period.

“Domestic debt issuance for the month totaled P121.1 billion while redemption amounted to P177.9 billion, resulting in a net repayment of P56.8 billion,” the BTr said.

“Local currency depreciation against the US dollar had minimal effect on debt stock valuation at only P0.01 billion,” it added.

Data from the Treasury showed that the peso closed at P56.66 against the dollar as of end-September, weakening by just 0.02% from P56.651 as of end-August.

Meanwhile, foreign debt dipped by 0.5% to P4.53 trillion at end-September from P4.56 trillion in the prior month due to “favorable third-currency fluctuations and net repayment of foreign loans.”

“The outstanding external debt for September was reduced by P8 billion due to the net repayment of foreign loans and P16.9 billion from the depreciation of third currencies against the US dollar. Meanwhile, peso depreciation against the US dollar added P0.7 billion,” the BTr said.

Year on year, foreign debt rose by 7.5% from P4.22 trillion.

Broken down, external borrowings consisted of P2.07 trillion in loans and P2.47 trillion in global bonds.

As of end September, the NG’s overall guaranteed obligations inched down by 1.2% to P362.22 billion from P366.58 billion as of end-August.

Year on year, guaranteed debt declined by 8.8% from P397.22 billion.

“The decline in the level of guaranteed debt was attributed to the net repayment of both domestic and external guarantees amounting to P1.6 billion and P1.4 billion, respectively,” the BTr said.

“In addition, the value of third-currency denominated guarantees went down by P1.3 billion, due to currency adjustments, offsetting the P0.03-billion additional debt caused by peso depreciation against the US dollar,” it added.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that the slightly lower debt stock was due to the net payment of debt amid larger maturities of government bonds as of September.

“For the coming months, especially in the fourth quarter up to February 2024, relatively lower maturity of government debt and budget deficit that needs to be financed could lead to additional borrowings that could lead to new record high for the outstanding NG debt,” he said in a Viber message.

In the January-to-September period, the NG’s budget deficit narrowed by 2.89% to P983.5 billion.   

For 2023, the government has set a budget deficit ceiling of P1.499 trillion, equivalent to 6.1% of the gross domestic product (GDP).

In a statement on Tuesday, Finance Secretary Benjamin E. Diokno said that the lower deficit “indicates that NG debt-to-GDP ratio will continue to stabilize.”

The NG’s debt as a share of GDP stood at 61% at the end of June, still above the 60% threshold considered by multilateral lenders to be manageable for developing economies.

Mr. Diokno also said that a narrower deficit will help the country achieve its target of bringing the debt-to-GDP ratio to 61.2% this year and below 60% by 2025.

“As we enter the fourth quarter of 2023, we expect to see improvement in tax revenue collections as economic activity increases amid the holiday season, while the government further increases its spending. The expected deceleration in inflation for the remaining months of the year could also provide support to consumption, a significant tax base,” he said.

Mr. Ricafort also noted that the retail dollar bond issuance in October and the upcoming Sukuk bond offering could drive outstanding debt higher in the next few months.

The government raised $1.26 billion from its first retail dollar bond offering under the Marcos administration. The offer period for the retail dollar bonds ran from Sept. 27 to Oct. 6.

The Department of Finance also earlier announced its plan to launch Sukuk bonds by end-November. It is targeting to raise about $1 billion from the offer.

This year, the government plans to borrow P2.207 trillion, consisting of P1.654 trillion from domestic sources and P553.5 billion from foreign sources.