By means of Beatriz Marie D. Cruz, Reporter
THE NATIONAL GOVERNMENT (NG) outstanding debt reached one A new high of P15.69 trillion as of end-July, amid a surge in domestic and external borrowings, the Bureau of the Treasury (BTr) said.
BTr data on Tuesday showed NG debt levels rose 1.33% at the end of July from P15.48 trillion at the end of June.
“The NG’s debt portfolio increased by P206.49 billion or 1.3% from the end-June 2024 level, mainly due to the net issuance of both domestic and foreign debt,” the BTr said in a press release .
Year on year, outstanding debt rose 10.15%, compared to P14.24 trillion at end-July 2023.
The debt burden already represents 97.71% of the total debt projection of P16.06 trillion by the end of the year at the end of July, according to the latest data from the Budget of Expenditures and Sources of Financing.
More than half (68.54%) of the debt came from domestic sources, while the rest (31.46%) came from foreign sources, the BTR said.
Domestic debt rose 1.7% to P10.75 trillion at the end of July, from P10.57 trillion last month. Year on year, it rose 9.6%, compared to P9.81 trillion in July 2023.
“The increase in domestic debt was mainly due to the net issuance of government bonds worth P180.52 billion, although partially dampened by the P0.49 billion downward revaluation effect of the appreciation of the peso on U.S. dollar-denominated domestic effects,” said the BTr. .
The peso closed at P58.488 at the end of July, rising 17 centavos from P58.659 at the end of June.
At P10.752 trillion, government bonds accounted for almost all of the domestic debt, according to BTR data.
On the other hand, external debt rose 0.54% to P4.94 trillion at the end of July from P4.91 trillion at the end of June. Year-on-year, external debt rose 11.4% from P4.43 trillion.
“The increase in external debt can be attributed to the net utilization of project loans worth P5.25 billion and the upward revaluation of the third currency of P35.44 billion, albeit partially mitigated by the P14.23 billion impact of the appreciation of the peso against the US. dollar,” the Ministry of Finance said.
External debt consists of P2.32 trillion in loans and P2.62 trillion in government bonds. The latter consisted of P2.22 trillion in US dollar bonds, P218.49 billion in Euro bonds, P67.32 billion in Japanese yen bonds, P58.49 billion in Islamic certificates.Ficates and P54.77 billion in global peso bonds.
At the end of July, NG’s guaranteed liabilities rose 0.3% to P344.79 billion from P343.65 billion at the end of June.
“The increase in NG guarantees was primarily due to the P3.57 billion effect of third currency adjustments against the U.S. dollar, which more than outweighed the P1.96 billion reduction in domestic and external net repayments, as well as the P0.47 billion downward revaluation caused by the appreciation of the peso,” the BTR said.
On a year-over-year basis, guaranteed liabilities declined 5.1% from P363.39 billion.
Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, Inc., said natural gas countries’ debt burden will continue to rise, but at a slower pace.
“Now that we are not in an emergency… we expect debt levels to still rise, but at a slower pace… especially as we are on the cusp of the start of the US Federal Reserve’s monetary easing cycle Reserve, while the Bangko Sentral ng Pilipinas (BSP) has already started making cuts,” he said in a Viber message.
Last month, the Monetary Board cut rates by 25 basis points (bps), bringing the benchmark rate to 6.25%. The central bank is also likely to cut rates by another 25 basis points in the fourth quarter, BSP Governor Eli M. Remolona Jr. said.
It is widely expected that the US Federal Reserve will also start cutting interest rates this month.
Jonathan L. Ravelas, a senior adviser at professional services firm Reyes Tacandong & Co., said the government should minimize “unnecessary spending” to manage debt.
In a Viber message, he said the government should also accelerate infrastructure spending to attract investments.
Rizal Commercial Banking Corp. chief economist Michael L. Ricafort said the government’s intensified tax collections and other measures FIscal reform measures would also help reduce the NG’s budgetFslow down the rise in debt.
“New and higher taxes could be a FThe ultimate option is for inflation to decline further in an effort to reduce the NG debt-to-GDP ratio below the 60% international threshold, alongside faster GDP growth,” he said via Viber.
The NG debt-to-GDP ratio, or the ratio of how much a country owes to how much its economy produces to service its debtsFf-debt stood at 60.9% at the end of June.
This is still above the 60% threshold considered manageable by multilateral lenders for developing economies. The government expects the debt ratio to reach 60.6% this year.
The government’s borrowing program for this year is set at €2.57 trillion, of which €1.92 trillion from domestic sources and €646.08 billion from foreign sources.