Gov’t debt breaches P10 trillion in January

Published March 2, 2021, 4:19 PM

by Chino S. Leyco

The national government’s debt stock breached P10-trillion mark in January after its total obligations accelerated by P2.5 trillion amid aggressive borrowings to finance the country’s war chest against the coronavirus pandemic.

The Bureau of the Treasury reported on Tuesday, March 2, that the outstanding debt of the national government settled at P10.33 trillion as of January 2021, higher by 33 percent compared with P7.763 trillion in the same month last year.

Of the total debt obligations, 71 percent are domestic borrowings while the remaining 29 percent were sourced from external creditors.

At end-January, domestic debt rose 43 percent to P7.325 trillion from P5.123 trillion in the previous year, while offshore debt reached P3.001 trillion, up 14 percent compared with P2.639 trillion a year ago.

Month-on-month, outstanding debt stock jumped 5.4 percent in January from P9.795 trillion.

 “The level of NG debt reflects a P532.46 billion or 5.4 percent increment from the end-December 2020 level predominantly due to the reavailment of the P540.00 billion short-term loan facility from the BSP [Bangko Sentral ng Pilipinas],” the treasury said in a statement.

Based on the treasury data, the share of local currency debt increased to 71.53 percent as of end-January from 69.42 percent last year.

Broken down, US dollar, Japanese yen, euro and other currencies contributed 21.81 percent, 4.22 percent, 1.94 percent and 0.50 percent, respectively, representing foreign currency debt.

However, the treasury said the weighted average interest rate (WAIR) remains stable.

WAIR as of end-January improved to 4.13 percent from 4.17% in December and 4.95 percent a year ago. For the month alone, the average interest cost of domestic issuances slid to 2.63 percent from 3.1 percent in December 2020.

 “The debt portfolio reflects minimal exposure to interest rate volatility. As of end-January 2021, only 9.56 percent of the debt stock is subject to refixing, limiting exposure to a rising interest rate environment,” the treasury said.

Average residual maturity of 7.55 years is within the seven to 10-year target.

 “The debt portfolio’s average maturity moved slightly lower from the end-2020 level of 7.57 years as market appetite remains subdued,” the treasury said.

Average residual maturity for domestic and external debt is at 5.37 years and 12.49 years from 5.45 years and 12.14 years as of end-December 2020, respectively.