Foreign exchange movements saw the national government’s outstanding debt rise to P6.72 trillion in January, the Treasury bureau reported on Thursday.
“NG debt portfolio grew by 1.1 percent or P73.66 billion from the end-December level mainly due to the impact of foreign currency fluctuations,” the bureau said in a statement.
Domestic borrowings accounted for the bulk or P4.43 trillion, 0.2 percent lower from December, with the remainder owed to foreign creditors.
Outstanding debt a year earlier was P6.11 trillion with domestic and foreign obligations at P3.95 trillion and P2.16 trillion, respectively.
“For the month, the reduced level of domestic debt was due to net redemption of government securities amounting to P11.17 billion which were partially tempered by peso depreciation that increased the value of onshore dollar bonds by P0.70 billion,” the bureau said.
The peso, it noted, rose to P51.34 to the dollar as of end-January from December’s P49.95:$1. The exchange rate a year earlier was P49.75:$1.
External debt, meanwhile, rose by 3.8 percent or P84.14 billion from the end-December 2017 level.
“For January, external debt escalation was principally due to peso depreciation and the impact of third currency appreciation that raised the value of the US dollar and third-currency denominated indebtedness amounting to P61.21 billion and P6.78 billion, respectively,” the bureau said.
These added to net availments on foreign loans amounting to P16.15 billion.
Sought for comment, Land Bank of the Philippines economist Guian Angelo Dumalagan said peso’s decline was due to expectations of three to four rate hikes this year from the US Federal Reserve.
“The unwanted impact of the peso’s depreciation on the country’s debt, however, might be temporary as the local currency is expected to recover towards the end of the year amid optimism on the government’s tax reform and infrastructure program,” he told The Manila Times.
Government-guaranteed debt, meanwhile, also rose by P11.34 billion or 2.1 percent to P489.95 billion from December. It was down 5.7 percent, however, from January last year.
The month-on-month increase, the bureau said, was due to the “effect of US dollar and third currency fluctuations against the peso on external guarantees amounting to P7.77 billion and P4.00 billion, respectively.”
“These outpaced repayments on both domestic and foreign guarantees amounting to P340 million and P90 million, respectively,” it added.