Gov’t debt up slightly in Nov

MANILA, Philippines – The weak peso caught up with the national government’s debt pile which rose to P6.11 trillion by the end of November, the Bureau of the Treasury said.

Obligations went up 0.6 percent month on month, data from the BTr showed.

Unlike other economic data, debts are better compared on a monthly basis since they add and subtract to an existing pile, not refreshed every year.

Local debt reached P3.94 trillion or 0.5 percent higher than the year ago while its  foreign counterparts  inched up 0.7 percent to P2.17 trillion.

“For the month, NG debt portfolio grew...due to currency adjustments and net issuances of government securities,” the Treasury said in a statement.

As of last Friday’s close of 49.77, the peso had lost 5.76 percent of its value against the dollar from its 47.06 closing on Dec. 29, 2015.

During their meeting last Tuesday, economic managers said they forecast the local currency falling as much as P50 to a dollar next year and in 2018.

“For November, the growth in external obligations was significantly driven by the impact of depreciation of the peso against the US dollar...,” the Treasury said.

Broken down, foreign-denominated securities increased two percent to P1.34 trillion, offsetting a 1.5-percent drop in loans to P823.31 billion.

According to the Treasury, the peso’s drop more than offset the weakness of other currencies against the greenback during the period when anticipation was high the US Federal Reserve would raise rates.

The Fed eventually hiked rates for the second time in a decade this month, prompting investors to seek refuge to it and weakening the peso further. A weak peso increases the amount needed to pay foreign obligations.

On the domestic front, data showed the peso also had an impact, together with the higher amount of government securities issued during the period.

Specifically, the value of bonds accounted for the increase during the month, rising 0.5 percent to P3.94 trillion. Loans were steady at P598 billion.

“Weakening of peso against the US dollar (increased) the peso value of onshore dollar-denominated bond amounting to P0.63 billion,” Treasury said.