Weak peso takes heavy toll on gov't debt
The Marcos administration is feeling the pinch of the strengthening US dollar as the Bureau of the Treasury blamed the weak peso as one of the culprits for the national government’s ballooning debts.
On Thursday, Nov. 3, the Treasury bureau reported that as of September, the outstanding debt of the national government rose 13.4 percent to P13.517 trillion from P11.917 trillion in the same month last year.
While foreign loans account for only 31.2 percent of the total obligations, Treasury noted that the hefty difference between the peso-US dollar exchange rate this year and last year comes at the huge cost.
Based on the foreign exchange rate used by the Treasury, the peso had depreciated 15.2 percent to P58.646 in September from P50.879 in the previous year.
Between August and September alone, the Treasury said the weakness of the local currency against the dollar caused the government’s foreign and dollar-dominated domestic loans to rise P181.87 billion.
“Year-to-date, national government external debt increased by P658.30 billion or 18.5 percent primarily due to local- and third-currency fluctuations that increase the peso value of foreign denominated obligations,” the Treasury said.
Meanwhile, the bureau admitted that the government’s new borrowings also pushed up its total outstanding loans.
“At the current level, national government debt has increased by P1.79 trillion or 15.2 percent since end-December 2021,” the Treasury said. “ due to peso depreciation against the US dollar and the net issuance of government securities to support the budget.”
At end-September 2022, loans held by domestic banks reached P9.3 trillion, while foreign creditors have the remaining P4.22 trillion.
External and local obligations in September rose year-on-year by 19.5 percent and 10.9 percent, respectively.
Earlier, the Treasury reported that government borrowings hit P1.867 trillion in the first nine months of the year, up 28 percent form P2.602 trillion in the previous year.
Domestic financing declined by 27 percent to P1.52 trillion, while foreign borrowings also fell 32 percent to P345.96 billion.
The end-September financing accounts for about 84 percent of the government’s borrowing plan of P2.21 trillion for 2022.