Treasury: Philippine debt breached P14T as of end-May

The Philippines’ outstanding sovereign debt swelled to a new record high as it breached the P14-trillion mark as of end-May this year amid ramped up borrowing to support budgetary requirements and the weakening of the peso, which increased the local currency equivalent of obligations during the period.

Data from the Bureau of the Treasury showed that the national government’s outstanding debt stood at P14.10 trillion, up 1.3% from P13.91 trillion as of end-April 2023.

The month-on-month increase of sovereign debt level as of end-May 2023 was attributed to the net issuance of domestic and external debt and the depreciation of the local currency against the US dollar.

Of the total debt balance, 68% were sourced locally while the remaining 32% were from external sources.

In particular, domestic debt totaled P9.59 trillion, up 1.4% from P9.46 trillion month-on-month.

“For the month, the increment to domestic debt was primarily accounted for by the net issuance of government securities amounting to P129.11 billion,” the BTr said.

“Moreover, the impact of peso depreciation against the US dollar padded the value of onshore foreign currency-denominated securities by P1.56 billion,” it added.

Year-to-date, domestic debt saw an increase of 4.1% from P9.208 trillion local debt as of end-December 2022.

External debt, meanwhile, amounted to P4.51 trillion, up 1.2% from P4.45 trillion as of end-April this year.

The increase in foreign debt was mainly driven by the net availment of external loans amounting to P10.05 billion and the impact of local-currency depreciation against the US dollar amounting to P59.70 billion, according to the Treasury.

Year-to-date, external debt grew by 7.1% from the end-December 2022 level of P4.21 trillion.

As of the first quarter of 2023, the country’s debt-to-gross domestic product (GDP) ratio stood at 61%, down from 63.5% in the first quarter of 2022.

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. — RSJ, GMA Integrated News