Government debt hits record high of P7.104 trillion

MANILA, Philippines — The national government’s outstanding debt rose further to a new record high of P7.104 trillion as of end-August due to the issuance of samurai or yen-denominated bonds, the Bureau of the Treasury (BTr) reported yesterday.

In a statement, the BTr said the national government’s debt pile last August increased by 0.86 percent or P60.27 billion to P7.104 trillion from the P7.043 trillion recorded in the previous month.

This was, likewise, 10.5 percent higher than the P6.43 trillion outstanding debt level posted in August 2017.

The government borrows from both domestic and external lenders to plug its budget deficit and to pay maturing debt. For 2018, economic managers set a deficit ceiling equivalent to three percent of gross domestic product.

As of end-August, the BTr said domestic lenders accounted for 64.37 percent or P4.572 trillion of the total outstanding obligations. This was 0.6 percent or P27.61 billion lower than the end-July level of P4.6 trillion.

The Treasury said there was a decline in domestic debt as the government redeemed more securities than those it issued.

“For the month, the lower domestic debt was due to the net redemption of government securities amounting to P27.77 billion, slightly offset by the depreciation of the peso that increased the value of onshore dollar bonds by P160 million,” the BTr said.

Meanwhile, the BTr said the national government’s external liabilities as of end-August amounted to P2.53 trillion, 35.63 percent of the total outstanding debt.

This was also 3.6 percent or P87.88 billion higher compared to the end-July level of P2.443 trillion.

According to the Treasury, the growth in external debt last month could be attributed to the net availment of foreign loans amounting to P72.3 billion, which included the issuance of samurai bonds.

The BTr said foreign obligations also increased due to the impact of currency fluctuations, which raised the value of dollar and third-currency denominated debt by P14.48 billion and P1.10 billion, respectively.

Last August, the government successfully sold ¥107.2 billion ($1.39 billion) worth of samurai bonds with maturities spanning three, five and 10 years.

The securities were awarded at coupon rates of 0.38 percent, 0.54 percent and 0.99 percent, respectively. Overall, the transaction yielded a weighted average spread of 34.7 basis points above benchmark.