By means of Aubrey Rose A. Inosante, Reporter
Outstanding national government (NG) debt rose to a new high of P16.09 trillion at the end of November, partly due to the impact of the peso’s depreciation on the value of foreign bonds, according to the Bureau of the Treasury ( Btr).
Data from the BTR showed on Tuesday that outstanding debt increased by 0.4% or P70.7 billion to P16.09 trillion at the end of November from P16.02 trillion at the end of October.
Year on year, the debt increased by 10.9%, from €14.51 trillion.
The BTR attributed the higher debt level to “net financing and the impact of local currency depreciation on the valuation of foreign currency-denominated debt.”
The largest portion, or 67.87% of the total debt burden, came from domestic sources.
At the end of November, outstanding domestic debt rose 0.3% to P10.92 trillion from P10.89 trillion at the end of October.
“The increase was due to the net issuance of domestic securities of P30.67 billion and the P1.15 billion impact of the depreciation of the peso on U.S. dollar-denominated domestic debt,” the BTr said.
Government bonds accounted for almost all of the domestic debt.
Year-on-year, domestic debt rose 9% from P10.02 trillion.
Meanwhile, external debt rose 0.8% to P5.17 trillion at the end of November, from P5.13 trillion a month earlier.
“The significant depreciation of the peso led to an escalation of P35.61 billion in the local valuation of U.S. dollar-denominated debt, while net available loans added P8.33 billion,” the BTr said.
The Treasury Department added that the “favorable movements of the third currency” against the dollar had reduced external debt by P5.06 billion.
Based on the data, the Department of Finance used an exchange rate of P58.602 per dollar in November, down from P58.198 in October and P54.77 in November 2023.
Year-on-year, external debt rose 15.3% from P4.48 trillion a year earlier.
The government bonds consisted of P2.34 trillion in US dollar bonds, P213.72 billion in Euro bonds, P59.32 billion in Japanese yen bonds, P58.6 billion in Islamic certificates and P54.77 billion in global peso bonds.
Meanwhile, NG-guaranteed liabilities rose 2.5% to P422.04 billion at the end of November from P411.76 billion in October.
“This was the result of P8.95 billion in new domestic guarantees, as well as P1.85 billion in upward adjustments due to adverse currency movements,” the BTR said.
Year-on-year, NG guaranteed liabilities increased 19.51% from P353.14 billion.
The peso closed at P58.62 per dollar at the end of November, weakening 52 centavos from P58.1 at the end of October. On November 21 and 26, the rate also hit a record low of P59 per dollar.
Michael L. Ricafort, chief economist of Rizal Commercial Banking Corp., said the government needed to borrow more to finance persistent budget deficits.
The national government’s budget deficit rose to 1.18 trillion euros in the first eleven months, compared to 1.11 trillion euros a year earlier.
“Tax and fiscal reform measures would realistically be necessary to reduce the country’s debt-to-GDP ratio below the international threshold of 60% to maintain the country’s relatively favorable credit ratings of one to three notches above minimum investment grade as consistently maintained, to maintain. since the pandemic,” Mr. Ricafort said.
At the end of September, natural gas debt as a percentage of GDP stood at 61.3%, up from 60.2% a year earlier and 60.1% at the end of 2023.
Mr. Ricafort said interest rate cuts by the Bangko Sentral ng Pilipinas and the U.S. Federal Reserve could help ease debt service burdens in the coming months.
Senior Research Fellow John Paolo R. Rivera of the Philippine Institute for Development Studies said the P16.09 trillion debt remains “manageable” but must be accompanied by “prudent” fiscal management.for efficient tax collection and a broader tax base.
“Before December 2024, year-end budget requirements and adjustments might have pushed debt levels slightly higher. However, seasonal remittances and above Government revenues in December 2024 could have helped alleviate the deficit,” Rivera said.
For 2025, he expects the NG to balance its fiscal needs with “careful lending strategies,” such as leveraging concessional loans and managing foreign currency exposure.
NG’s debt burden is expected to reach P16.06 trillion by the end of 2024 and P17.35 trillion by 2025.