July government debt hits record P11.6T as state taps local and dollar bond markets

THE NATIONAL Government’s outstanding debt grew further to P11.61 trillion as of the end of July following a dollar bond issue and further tapping of domestic lenders, the Bureau of the Treasury (BTr) reported Tuesday.

Preliminary data from the BTr indicate that overall debt rose 4% month on month compared with the level booked at the end of June. It was 26.7% higher than the year-earlier total.

The debt stock has risen 21.3% from the end-2020 level of P9.8 trillion.

The government endeavors to maintain a balance of 70% domestic debt and 30% foreign to minimize exposure from external shocks like currency movements.

Outstanding domestic debt rose 2.3% from a month-earlier level to P8.12 trillion at the end of July following the issuance by the BTr of more government securities. Domestic borrowing rose 29.8% year on year and 21% compared with the ending debt balance in 2020.

The portfolio of government securities rose 2.4% from a month earlier to P7.6 trillion.

The government borrows from domestic and foreign sources to plug the budget deficit, which started to widen last year due to spending requirements imposed by the pandemic.

Outstanding external obligations rose 8.2% from a month earlier to P3.5 trillion at the end of July following a dual-tranche dollar bond issue and fluctuations in the value of the peso.

“The impact of both local- and third-currency exchange fluctuations against the US Dollar added P100.66 billion and P3.39 billion, respectively,” it said.

Overall foreign debt rose 20.1% from a year earlier. It has increased 12.6% since the end of 2020.

Foreign loans obtained by the government rose 4% month on month to P1.47 trillion, while the total for global bonds rose 11.4% to P2.02 trillion.

The government issued $3 billion (P149 billion) worth of securities on July 6 — $2.25 billion in 25-year instruments and $750 million worth of 10.5-year bonds. This raised the stock of dollar-denominated securities by 14.3% to P1.53 trillion at the end of July.

Euro-denominated bonds also rose 3.2% to P241 billion largely due to currency fluctuations, while samurai bonds rose 4.5% to P138 billion, and panda bonds were up 3% to P19.43 billion. Outstanding peso global bonds remained unchanged at P85.57 billion.

Debt guaranteed by the National Government rose 1.3% from a month earlier to P444.31 billion at the end of July after it guaranteed more foreign debt.

Guaranteed domestic obligations fell to P242.65 billion from P244.1 billion at the end of June, reflecting the retirement of some debt.

Guaranteed foreign debt rose 3.7% month on month to P201.65 billion.

“The higher level of guaranteed debt was due to the impact of local- and third-currency exchange rate fluctuations against the US dollar amounting to P6.07 billion and P1.25 billion, respectively, it said.

Budget planners have set a P3-trillion borrowing cap for this year.

The government’s outstanding debt is expected to hit P11.73 trillion by year’s end from P9.795 trillion at the end of 2020.

This is expected to rise further to P13.418 trillion at the end of 2022.

Economic managers project the debt stock to be equivalent to 59.1% of economic output by the end of this year, peaking at 60.8% in 2022. — Beatrice M. Laforga

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