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Philippine gov’t debt trimmed by 1.7% to P13.42T as of end-2022

The Philippine government closed the year 2022 with a trimmed running debt balance, thanks to a stronger peso and repayment of maturing obligations in December last year, data from the Bureau of the Treasury (BTr) on Thursday showed.

The end-December 2022 outstanding stood at P13.418 trillion, down 1.7% or by P225.31 billion from the end-November 2022 level of P13.644 trillion —which was a record-high.

Year-on-year, the government’s debt stock grew by P1.69 trillion or 14.4% from P11.73 trillion as of end-2021.

The Treasury attributed the month-on-month decline in the debt level as of the end of last year “primarily due to the effect of local currency appreciation and the net redemption of domestic government securities.”

The Philippine peso appreciated against the US dollar to P55.815:$1 as of end-December 2022 from P56.598:$1 as of end-November 2022, the BTr noted.

Sought for comment, Rizal Commercial Banking Corp. chief economist Michael Ricafort said the dropped in the running debt balance as of end last year “may have to do with the 1.4% appreciation of the peso that reduced the peso equivalent of US dollar/foreign debts as well as the large maturities of government securities/Treasury bonds, essentially repayment of some government debts.”

Bulk or 68.62% of the government’s running debt was sourced locally while the remaining 31.38% were foreign borrowings.

Domestic debt

The national government’s domestic debt totaled P9.2 trillion as of end-2022, down 2.3% from the end-November 2022 level of P9.43 trillion.

“The lower level of domestic debt was due to the net redemption of government securities amounting to P217.95 billion,” the BTr said.

“Moreover, local currency appreciation against the US dollar trimmed P1.63 billion from the peso value of foreign currency denominated domestic debt,” the Treasury added.

Year-on-year, the end-December 2022 local debt stock rose by P1.04 trillion or 12.7% from the end-December 2021 level of P11.73 trillion.

Foreign debt

Meanwhile, the government external debt amounted to P4.21 trillion, down 0.1% or P5.73 billion lower than the end-November level of P4.216 trillion.

The Treasury attributed the lower foreign debt “due to the P58.34 billion impact of currency adjustments on foreign currency debt valuation.”

“This offset the net impact of third-currency fluctuations against the US dollar amounting to P34.07 billion and the P18.54 billion net availment of foreign loans,” it added.

Compared to 2021, the national government’s external debt grew by 18.3% or P652.34 billion from P3.6 trillion year-on-year.

Ricafort said the peso’s by 2% in January this year “could again help reduce the peso equivalent of the country’s US dollar/foreign debts.”

“However, the $3 billion (or equivalent to about P164 billion) global bond issuance in January 2023 could add to the national government’s outstanding debt stock,” the economist said.

Early last month, the Marcos administration raised a total of $3 billion or about P164 billion from its sale of triple-tranche dollar-denominated bonds, marking its second fund raising effort in the offshore debt market.—AOL, GMA Integrated News