Debt eases from record high

Philippine Tribune
Philippine Tribune

Louise Maureen Simeon – The Philippine Star

November 1, 2023 | 12:00am

Due to P81 billion net repayments in September

MANILA, Philippines — The country’s outstanding debt slightly went down to P14.27 trillion as of end-September following the repayment of obligations to both local and foreign lenders.

Data from the Bureau of the Treasury showed the national debt declined by 0.6 percent from the record-high P14.35 trillion in August. On a yearly basis, however, the debt stock picked up by 5.6 percent from P13.52 trillion.

In September, the government reduced the debt pile by P80.9 billion due to net repayments of both domestic and external obligations.

As such, the current debt pile is now about 97.6 percent of the expected P14.62 trillion debt by end-2023.

Rizal Commercial Banking Corp. chief economist Michael Ricafort, however, said that the usually positive easing of outstanding debt may not last long.

He said obligations may start picking up again in the fourth quarter until February 2024.

“This is due to relatively lower maturity of government debt and any continuation of budget deficits that need to be financed could lead to additional borrowings and to new record high for the outstanding debt,” Ricafort said.

The recent retail dollar bond issuance in October, the upcoming $1 billion sukuk bond before yearend as well as the planned euro bond offer are also expected to bloat government debt.

Meanwhile, the Treasury said domestic borrowings accounted for the majority or 68.2 percent of the debt pile while the remaining 31.8 percent came from external sources.

Total domestic debt at P9.73 trillion went down by 0.6 percent on a monthly basis due to the net redemption of government securities. However, this jumped by 4.7 percent from the P9.3 trillion in September 2022.

For the month, domestic debt issued reached P121.1 billion with a debt redemption of P177.9 billion, resulting in a net repayment of P56.8 billion.

The Treasury said local currency depreciation against the dollar had minimal effect on debt stock valuation at only P10 million.

External obligations, on the other hand, also decreased by 0.5 percent to P4.53 trillion month-on-month. It rose 7.5 percent from P4.22 trillion on a yearly basis.

This is largely due to favorable third currency fluctuations and net repayment of foreign loans.

The reduction of about P8 billion in foreign debt was also attributed to the net repayment of foreign loans and another P16.9 billion from the depreciation of third currencies against the US dollar.

Meanwhile, total debt guaranteed obligations rose by 1.2 percent to P362.22 billion due to the net repayment of both domestic and external guarantees worth P1.6 billion and P1.4 billion, respectively.

The value of third currency denominated guarantees went down by P1.3 billion, due to currency adjustments, offsetting the P30 million additional debt caused by peso depreciation.

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