Weak peso pushes Philippines debt to P15.3 trillion

New record high in may

MANILA, Philippines — The continued weakening of the peso against the dollar pushed the country’s debt to a new record high of P15.3 trillion in May,  the Bureau of the Treasury said.

Latest data from the Treasury showed that the national debt settled at P15.347 trillion as of end-May, the highest level to date.

This is also 8.4 percent higher than the P14.15 trillion debt in the same month last year.

Theoretically, at P15.347 trillion, each of the estimated 119.9 million Filipinos is indebted by P128,455 to foreign and domestic creditors.

For May alone, the government added a total of P330.39 billion to the debt pile due to the impact of local currency depreciation on the valuation of foreign currency-denominated debt.

The peso depreciated against the dollar to 58.524 as of end-May from 57.583 a month ago, marking its worst showing in nearly two years, after the US Federal Reserve signaled the possibility of a delayed monetary policy easing.

Jonathan Ravelas, managing director of eManagement for Business and Marketing Services, said the rising debt is starting to add to the worry on top of the continued strengthening of the dollar.

“The need for sustainable revenue is much needed. It comes at a time when interest rates are rising too,” Ravelas told The STAR.

Ravelas also raised the possibility of the debt pile piercing the P16-trillion mark this year, above the expectations of the government.

As of May, the outstanding debt is already 96.8 percent of the 2024 debt expectation of a record P15.84 trillion.

Ravelas said the debt level could reach P16.18 trillion by yearend even with rate cuts being penciled in by global and local monetary authorities over the coming months.

“The geopolitical landscape and the risks that come with it and the sticky inflation are causing the higher rates for longer,” Ravelas said.

Meanwhile, the Treasury said domestic borrowings accounted for  the bulk or 68 percent of the debt pile while  the rest came from external sources.

Total domestic debt at P10.44 trillion rose by 1.3 percent on a monthly basis due to the net issuance of government securities worth P131.66 billion, as well as the P2.68 billion effect of the weak peso.

It also jumped by nine percent from the P9.59 trillion in debt in May 2023.

External obligations, on the other hand, rose by  4.2 percent to P4.9 trillion month-on-month. It grew by 7.4 percent from P4.57 trillion on a yearly basis.

The Treasury said this was attributed to the P122.04 billion in net foreign loan availment and P76.94 billion in upward revaluation of  dollar-denominated debt.

Favorable third-currency movement only provided a P2.94-billion downward revaluation effect.

Further, the government’s guaranteed obligations went down by 1.6 percent to P350.2 billion due to the net repayment on both domestic and external guarantees worth P4.36 billion and P3.55 billion, respectively.

Third-currency adjustments against the dollar further trimmed P620 million, dampening the P2.68 billion increment caused by peso depreciation against the greenback.