Gov’t debt rises P95 B to P11.166 trillion in June

Published July 29, 2021, 3:47 PM

by Chino S. Leyco

Government debt inched up anew in June this year due to higher borrowings from foreign creditors.

Data from the Bureau of the Treasury showed that the national government’s outstanding debt stock stood at P11.166 trillion as of June, up by P94.9 billion from P11.071 trillion in the previous month.

Of the total debt stock, 71.1 percent were domestically borrowed, while those sourced externally accounted for the remaining 28.9 percent.

Government debt held by overseas lenders increased 2.3 percent to P3.227 trillion in June from P3.155 trillion in May.

Based on the Treasury report, US dollar-denominated bonds drove the rise in external obligations, which added P27.03 billion in new debt.

To recall, the Duterte administration had issued $3 billion worth of 10.5-year and 25-year US-dollar denominated global bonds during the month.

Apart from new debt, the treasury said the increase was also fueled by weaker local-currency after the peso depreciated to 48.7 against the US dollar from 47.7 last month.

Domestic debt, meanwhile, rose at a much slower pace of 0.3 percent to P7.938 trillion from P7.915 trillion a month ago.

According to the Treasury, the slight rise was “a result of the net issuance of government securities.”

Year-on-year, the government’s total debt accelerated by 23 percent from only P9.054 trillion in June 2020.

Local debt rose 28 percent in June from P6.19 trillion in the same month last year. Likewise, foreign obligations increased 13 percent during the same period from P2.864 trillion.

The government’s record debt level was due to higher borrowing requirement to finance the country’s needs amid the coronavirus pandemic.

Finance Secretary Carlos G. Dominguez III and Bangko sentral ng Pilipinas Governor Benjamin E. Diokno said the adverse impact of the prolonged pandemic will be short-lived.

Earlier, Fitch Ratings adjusted the outlook on the Philippines from “stable” to “negative,” an indication that the rating agency is seeing risks that might result in downgrading the country’s credit rating in the near future.

Among the downside risks cited by Fitch to the Philippines’ medium-term growth prospects was the weakened fiscal finances of the government as a result of the coronavirus pandemic.

However, Fitch affirmed the country’s credit rating at “BBB,” which is one notch above the minimum investment grade.