Government debt piles up to P7.29 trillion in 2018

MANILA, Philippines — The debt pile of the national government (NG) climbed by 9.6 percent to P7.29 trillion last year from P6.65 trillion in 2017 as the government decided to borrow more to plug the budget shortfall, according to the Bureau of Treasury.

Based on a report from the BTr, 65.5 percent of the total debt stock was sourced from domestic creditors, while the remaining 34.5 percent came from foreign creditors.

The offshore borrowings of the national government recorded a double-digit increase of 13.8 percent to P2.51 trillion last year from P2.21 trillion in 2017.

The Philippine government turned more to the offshore market with the issuance of samurai as well as panda bonds.

Aside from P1.3 trillion from the issuance of US dollar-denominated bonds, the Philippines also floated P129.68 billion worth of peso global bonds.

It also diversified its sources of funding by issuing P121.75 billion worth of Japanese yen-denominated or samurai bonds as well as P11.17 billion worth of Chinese yuan-denominated or panda bonds.

On the other hand, the Treasury reported a 7.6 percent rise in onshore borrowings to P4.77 trillion in 2018 from P4.44 trillion in 2017 via the issuance of treasury bills (T-bills), Treasury bonds (T-bonds), and retail treasury bonds (RTBs).

The national government borrows heavily from both local and foreign creditors as its revenues are less than its expenditures, resulting in a budget shortfall.

Despite the increase in the total debt pile, the Treasury said the ratio of debt to gross domestic product (GDP) slipped to 41.9 percent last year from 42.1 percent in 2017.

“The lower debt-to-GDP ratio is due to the moderate increment in debt as a result of prudent cash and debt management and steady economic growth,” the Treasury said in a statement.

For December, the national government debt inched up by 1.35 percent to P7.29 trillion from P7.19 trillion in November as domestic borrowings rose by 7.6 percent to P4.77 trillion from P4.71 trillion in November.

“For the month, the rise in domestic debt level was due to the net issuance of government securities amounting to P68.79 billion and peso depreciation that increased the value of onshore dollar bonds by P80 million,” it said.

Meanwhile, foreign borrowings inched up 1.2 percent to P2.51 trillion from P2.49 trillion.

“For the month, foreign exchange fluctuations on both dollar and third-currency denominated debt contributed the biggest increment to external debt amounting to P8.26 billion and P14.33 billion, respectively, along with net availments on foreign loans which added P6.02 billion,” the Treasury said.

For 2019, the national government has programmed a borrowing of P1.19 trillion from P986 billion in 2018 as it expects a higher budget deficit.

The Cabinet-level Development Budget Coordination Committee (DBCC) raised the budget deficit ceiling to P624.73 billion or 3.2 percent of GDP this year, higher than the three percent cap in 2018.

Early this month, the Philippines raised $1.5 billion via the issuance of dollar-denominated bonds.

It has also programmed a domestic borrowing of P360 billion via the issuance of T-bills and T-bonds in the first quarter.