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Philippine gov’t debt surges to a record P13.7T in January

The Philippine government’s debt ballooned to a new record high as of the end of January 2023 due to the availment of both local and foreign loans, data from the Bureau of the Treasury (BTr) on Tuesday showed.

The end-January outstanding debt stood at P13.7 trillion, up 2.1%, or P279.63 billion, from the end-December 2022 level of P13.418 trillion.

The Treasury said the increase in the debt stock during the period was "due to the net availment of domestic and external debt."

In an emailed commentary, Rizal Commercial Banking Corp. chief economist Michael Ricafort said the new record high outstanding debt "may have to do with the $3 billion or about P164 billion global bond offering of the national government in January 2023."

In January, the Marcos administration raised a total of $3 billion, or about P164 billion, from the sale of triple-tranche dollar-denominated bonds, marking its second fundraising effort in the offshore debt market.

The lion’s share, or 68.5%, of the end-January debt stock was sourced locally, while the remaining 31.5% was sourced externally.

The domestic debt totaled P9.38 trillion, up by P176.55 billion, or 1.9%, from the end-December 2022 level of P9.2 trillion.

The BTr attributed the increase in local debt to the "net availment of domestic financing amounting to P179.16 billion, offsetting the P2.61 billion effect of local currency appreciation against the US dollar on foreign denominated onshore securities."

Meanwhile, external or foreign debt stood at P4.31 trillion, up 2.4% or P103.08 billion from the P4.21 trillion seen as of December 31, 2022.

"The increase in the national government’s external obligations for January was brought on by the P186.56 billion net availment of foreign loans and the P10.36 billion impact of third-currency adjustments against the US dollar," the Treasury said.

"However, peso appreciation reduced the peso value of foreign currency-denominated debt by P93.84 billion," it said.

Ricafort said the national government debt could still increase for the month of February in view of the national government’s P287.3 billion Retail Treasury Bond (RTB) issuance on February 22.

"New official development assistance (ODA) and other multilateral funding, especially for the country’s various infrastructure projects, would also add to the country’s outstanding national government debt in the coming months, as infrastructure spending as a percentage of GDP increased to more than 5% in recent years," the economist said.

As of end-2022, the debt-to-GDP ratio, or the government’s debt stock relative to the size of the economy, eased to 60.9% from 63.7% as of the third quarter of 2022, which was the highest since 2005.

The government aims to bring down the debt-to-GDP ratio to less than 60% by 2025 and further shrink it to 51.1% by 2028, as well as reduce the deficit-to-GDP ratio to 3% by 2028 and maintain infrastructure spending at 5% to 6% of GDP annually.

Prior to the COVID-19 pandemic, the Philippines’ debt-to-GDP ratio reached a record low of 39.6% in 2019. —VBL, GMA Integrated News