National public debt hits record 12.09 trillion pesos at end of February

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Reuters

Outstanding national government debt hit a record 12.09 trillion pesos at the end of February as domestic and foreign borrowing increased, the Treasury Board (BTr) said on Thursday.

Preliminary data from the BTr showed that outstanding debt rose by 16.2% from 10.4 trillion pesos a year ago.

The BTr said total debt fell slightly up 0.5% or 63.83 billion pesos month-on-month “due to currency fluctuations and net financing from local and foreign sources”.

Of this total, 70% of the debt portfolio came from domestic lenders while the rest came from external sources.

The stock of domestic debt increased by 14.3% to reach 8,410 billion pesos year-on-year and by 0.54% month-on-month. The Treasury attributed this to net issuance of government securities totaling 44.89 billion pesos.

Of this amount, P8.11 trillion came from government securities, which jumped 18.9% year-on-year and 0.6% month-on-month.

On the other hand, external debt stood at 3,680 billion pesos at the end of February, up 20.95% from 3,040 billion pesos a year earlier.

“For February, the increase in external debt was due to the impact of the depreciation of the peso against the (US dollar) in the amount of 17.91 billion pesos and the net use of external obligations amounting to 3.25 billion pesos,” the Treasury said. “These more than offset the reduction of 2.74 billion pesos caused by adjustments in other foreign currencies.”

In February, the weakest close of the peso against the dollar was 51.50 pesos on February 8.

Rizal Commercial Banking Corp.’s chief economist, Michael L. Ricafort, said the stock of debt is likely to rise after US-dollar-denominated bond issues in March.

“The public debt could increase further given the issuance of retail Treasury Bonds (RTB) of 457.8 billion pesos and the 2.25 billion dollars, both for the month of March 2022 to finance the budget deficit amid rising infrastructure spending,” he said in a Viber. a message.

The Treasury raised $2.25 billion from its Iffirst U.S. dollar-denominated triple-tranche bond issue last week, which included its Iffirst green bonds.

The government said it had raised $1 billion from the first 25-year green bond offuh, as well as $500 million in five-year bonds and $750 million in 10.5-year bonds.

The next administration would inherit a fiscal handicap, “given projected deficit and debt levels,” ING Bank NV Manila senior economist Nicholas Antonio T. Mapa said in an email.

“Let’s hope debt levels don’t deteriorate further because the Philippines canfforder a credit rating downgrade in a rising global rate environment.

Fitch Ratings said last month it was maintaining the Philippines’ BBB credit rating, but with a “negative” outlook.

A “negative” outlook means Fitch could downgrade the Philippines’ credit rating over the next 12 to 18 months. The outlook was revised from “stable” to “negative” in July 2021 due to the impact of the pandemic on the economy.

Ricafort said the next administration should “support the country’s economic and fiscal efforts,” to improve tax collection and good governance measures, and to help reduce the country’s debt-to-GDP (gross domestic product) ratio. countries at the internationally accepted level of 60%. %.

In 2021, the Philippines’ debt-to-GDP ratio hit a 16-year high of 60.5%. This figure is above the 60% threshold considered manageable by multilateral lenders for developing economies. — Tobias Jared Tomas

Stock of national public debt

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