Philippines’ debt up by 1.49% to P14.48T as of end-Oct. 2023

The country’s sovereign debt increased as of end-October 2023 as the government borrowed more from both domestic and international sources during the period.

Data released by the Bureau of the Treasury (BTr) on Tuesday showed the national government running or outstanding debt stood at P14.48 trillion, up 1.49% from P14.27 trillion as of end-September 2023.

The Treasury said the month-on-month increase in the government’s debt stock reflected the “net issuance and availment of domestic and external loans, as well as the revaluation effect of peso depreciation against the US dollar.”

Of the total debt balance, 68.38% was sourced locally while the remaining 31.62% was from foreign sources.

The country’s domestic debt amounted to P9.90 trillion, up 1.73% from P9.73 trillion as of end-September as the government issued debt securities to beef up its coffers.

During the month, the government issued P213.42 billion in domestic debt securities, compared with principal payments amounting to P45.68 billion, resulting in a net repayment of P167.75 billion. 

The BTr added that the effect of local currency depreciation against the US dollar on the debt stock valuation was minimal at only P230 million. 

Year-to-date domestic debt saw an increment of P693.95 billion or 7.54%.

Foreign debt, meanwhile, grew by 0.97% to P4.58 trillion from P4.53 trillion month-on-month.

“For October, the increase in external debt was due to the net availment of foreign loans amounting to P33.52 billion, and the P11.84 billion upward adjustment in valuation caused by peso depreciation against the US dollar,” the Treasury said.

The country’s external debt increased by P367.99 billion or 8.74% from the end-December 2022 level of P4.21 trillion.

Consequently, the country’s debt-to-gross domestic product (GDP) ratio, which measures the amount of the government’s debt relative to the size of the economy, improved at 60.2% as of the third quarter of the year from 61% of the second quarter.

This came after the faster economic growth seen in the same period of 5.9%, from 4.3% in the second quarter. 

A lower debt-to-GDP ratio indicates that the country can pay off its debt without having adverse impacts on the economy.

Under the administration’s Medium Term Fiscal Framework, the government aims to bring down the debt-to-GDP ratio to less than 60% by 2025 and further shrink it to 51.1% by 2028.

Finance Secretary Benjamin Diokno earlier said that the country’s debt management strategy prioritizes the domestic market over external sources to protect the country against foreign exchange risk as fluctuations in exchange rates run the risk of increasing debt service payments each time the peso depreciates.

Prior to the COVID-19 pandemic, the Philippines’ debt-to-GDP ratio reached a record low of 39.6% in 2019.—AOL, GMA Integrated News