Philippines debt declines to P14.9 trillion in March

MANILA, Philippines —  The country’s outstanding debt declined by nearly two percent to P14.93 trillion as of end-March from a record P15.18 trillion a month ago as the government settled its obligations to both local and foreign lenders, according to the Bureau of the Treasury.

On a yearly basis, however, the debt stock picked up by 7.7 percent from P13.86 trillion.

For March alone, the government reduced the debt pile by P252.98 billion due to net repayments of both domestic government securities.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the decline in the country’s outstanding debt was largely brought about by the maturities of the government’s retail Treasury bonds (RTBs) in March worth around P700 billion.

The government raised a record P584.86 billion from its offering of five-year RTBs.

“Payment of maturing debt tends to reduce the national government’s debt stock,” Ricafort said. “However, the upcoming global bond issuance could again lead to some increment in the national government’s debt stock.”

The increase in the government’s borrowing plan for 2024 as well as higher inflation in the coming months could also lead to higher government expenditures, which could drag economic growth and tax revenue collections, he said.

Based on Treasury data, domestic borrowings accounted for the majority or 68.86 percent of the debt pile, while the remaining 31.14 percent came from external sources.

Total domestic debt stood at P10.28 trillion as of end-March, 2.8 percent lower on a monthly basis, but jumped by eight percent from the P10.02 trillion in March 2023.

The P299.45 billion net redemption of government securities offset the P240 million effect of local currency depreciation against the dollar on onshore foreign currency-denominated debt.

External obligations, on the other hand, slightly went up by one percent to P4.65 trillion month-on-month. It rose seven percent from P4.34 trillion on a yearly basis.

The Treasury said the increase in external debt was due to the P44.01 billion net availment of foreign loans, as well as the P7.05 billion impact of peso depreciation against the dollar.

These more than offset the effect of appreciation in third currencies against the greenback, which amounted to P4.83 billion.

Meanwhile, total debt guaranteed obligations inched up by 0.3 percent to P346.04 billion due to the net availment of domestic guarantees amounting to P2.48 billion as well as the P250 million impact of the peso depreciation against the dollar on external guarantees.

The net repayment in domestic guarantees offset the P1.15 billion from the outstanding balance as of end-March.