PH debt balloons to record high P13.91T as of end-April 2023

The Philippine government’s running debt has ballooned to a new record high as of end-April this year, mostly due to the weakening of the peso, which increased the local currency equivalent of foreign obligations during the period, data released by the Bureau of the Treasury (BTr) showed Wednesday.

The national government’s outstanding debt stood at P13.911 trillion, up 0.4% or P52.24 billion, from P13.856 trillion as of end-March 2023.

The Treasury attributed the increase to “the net issuance of external debt and local currency depreciation against the US dollar.”

Broken down, the bulk, or 68%, government’s total debt stock was sourced locally, while the remaining 32% were foreign borrowings.

In particular, domestic debt totaled P9.457 trillion, down 0.6% from P9.513 trillion, as of the prior month.

The lower domestic debt was “due to the net redemption of domestic securities amounting to P57.79 billion.”

This, however, was slightly offset by the P2.47 billion effect on onshore foreign currency-denominated securities caused by peso depreciation against the US dollar, according to the BTr.

In April, the Philippines sank to a four-month low against the US dollar, tracking the P56:$1 level during the period. 

Foreign debt, meanwhile, saw an increase of 2.5% to P4.453 trillion from P4.343 trillion as of end-March 2023.

“For April, the increment to external debt was due to the P27.98 billion net availment of external loans and P94.28 billion impact of local-currency depreciation against the US dollar,” the Treasury said.

“On the other hand, third-currency adjustments against the US dollar trimmed P12.30 billion from the peso value of foreign currency debt,” it said.

Despite the increase in the debt pile, its size compared to the economy’s worth has shrunk as of the first quarter of the year. 

For the January to March 2023 period, the Philippines' debt-to-gross domestic product (GDP) ratio stood at 61%, down from 63.5% in the first quarter of 2022, Diokno said in a statement.

The debt-to-GDP ratio represents the amount of the government’s debt stock relative to the size of the economy.

The government is targeting to bring down the debt-to-GDP ratio to less than 60% by 2025, then further down to 51.1 percent in 2028, and reduce the budget deficit to 3.0% of GDP by 2028. —VAL, GMA Integrated News