The country’s outstanding debt peaked higher of P7.49 trillion by January of 2019 as the national government borrowed more both locally and abroad in despite good yields.
Bureau of the Treasury reported the 2.8-percent month-on-month rise in unsettled obligations from end of 2018’s P7.29 trillion was “mainly due to net availments of both foreign and domestic loans amid efforts to take advantage of generally favorable market conditions to raise foreign and local funding.” said a statement on Monday
The debt stock as of January shot up 11.4 percent from P6.73 trillion during the same month last year. The national government traded $1.5 billion in new 10-year global bonds at 3.75 percent last January as in by tradition tapped the offshore market at the start of recent years.
Accounting for 65.5 percent or nearly two-thirds of the total outstanding amount, the domestic debt amplified by 2.8 percent month-on-month and 10.8 percent year-on-year to P4.91 trillion.
It was attributed to the surge in locally sourced obligations from a month ago levels to “net issuance of government securities amounting to P133.18 billion, which more than offset the P200-million downward valuation of onshore dollar bonds brought about by the peso appreciation.” Treasury said.
In the meantime, the external debt heightened to 2.7 percent month-on-month and 12.6 percent year-on-year to P2.58 trillion last January.
“The [month-on-month] rise in external obligations was primarily caused by net availments of foreign loans amounting to P83.29 billion. Meanwhile, the weakening of the dollar, on one hand, decreased the peso value of dollar-denominated debt by P19.24 billion, but on the other hand, increased the peso equivalent of third currency-denominated debt by P4.63 billion, thereby resulting in a net downward revaluation effect of P14.61 billion,” the Treasury added.
Regardless of the rising amount of debt, its share to the growing economy was on a downtrend.
“This means we are able to pay our bills,” remarked Assistant Secretary Antonio Joselito G. Lambino II of the Department of Finance. He said last week that the debt-to-gross domestic product (GDP) ratio last year was projected to be at 41.9 percent, below the 42.1 percent in 2017.
The Duterte administration expects the debt-to-GDP ratio to further wane to 38.8 percent by 2022 as economic growth will overtake higher borrowings as his government plans to borrow more to backing priority programs and infrastructure projects.
This year’s bigger borrowings will finance the broader budget deficit cap equivalent to 3.2 percent of GDP, while also providing funds for the Duterte administration’s ambitious “Build, Build, Build” infrastructure program, which lines up 75 “game-changing” projects, with around half expected to be completed during President Duterte’s term, to usher in “the golden age of infrastructure” by 2022.