Philippines debt increases to record-high P14.51 trillion as of end-Nov. 2023

The Philippines’ sovereign debt ballooned to a new record high as of the end of November 2023 as the government increased its local borrowings.

Data released by the Bureau of the Treasury on Wednesday shows that the national government’s running debt balance as of end-November last year stood at P14.51 trillion, up 0.19% from P14.48 trillion seen as of end-October 2023.

The Treasury said the month-on-month increment in the government debt stock was “primarily due to the net issuance of domestic securities.”

In an emailed commentary, Rizal Commercial Banking Corp. chief economist Michael Ricafort said the higher debt incurred during the period was amid the new government borrowings needed to fund the continued budget deficits since the start of 2023.

Of the total running debt, the lion’s share or 69.09% were sourced locally while the remaining 30.91% were from foreign sources.

The country’s domestic debt totaled P10.02 trillion, up 1.23% from P9.9 trillion as of end-October 2023 “due to the net issuance of government securities.”

“New domestic debt issued during the month totaled P171.091 billion while principal redemption amounted to P45.14 billion, underlying a net issuance of P125.95 billion,” the Treasury said.

Ricafort, likewise, said the higher domestic debt was “due to net new local debt issuance, higher prices/inflation that increased government expenditures that led to the continued budget deficit that needs to be financed by new government borrowings, as well as higher interest rates that increased financing costs of the government.”

Nevertheless, the domestic debt pile’s increase was partially offset by the P3.87-billion effect of peso appreciation on foreign currency-denominated domestic securities.

Year-to-date, domestic debt registered an increase of P816.02 billion or 8.86%.

Meanwhile, the country’s external debt amounted to P4.48 trillion, down 2.06% from P4.6 trillion as of the end of the prior month.

“For November, the lower level of external debt was due to the net repayment of foreign loans amounting to P1.08 billion and favorable foreign exchange movements, wherein the P109.37 billion reduction attributed to peso appreciation against the US dollar far exceeded the upward adjustment linked to third-currency appreciation of P16.30 billion,” the Treasury said.

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. — BM, GMA Integrated News