Govt debt hits P6.07T at end-Oct

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THE outstanding debt of the national government rose to P6.07 trillion as of end-October, which analysts said can be attributed to a weak local currency and higher fiscal spending.

Data released on Wednesday by the Bureau of the Treasury (BTr) showed the national government’s
outstanding debt climbed to P6.069 trillion in the first 10 months of 2016 from P5.95 trillion in the same period a year ago, reflecting an increase of 1.9 percent or P111.6 billion.

“We believe the expansion is in line with higher fiscal spending and a weaker Philippine peso. Underlying fiscal position remains strong,” said Rahul Bajoria, economist at United Kingdom-based investment bank Barclays.

However, the BTr said national government liabilities decreased slightly by P17.36 billion or 0.3 percent from its end- September level due to currency adjustments and net repayment of external debt.


Foreign borrowings at end-October stood at P2.15 trillion, 4.5 percent higher than the year-earlier level but down 1.4 percent or P30.72 billion from the end-September level.

The external debt in October was priced at P48.485 to a dollar compared to P46.90 a year earlier and to P48.482 at end-September this year.

The BTr said the month-on-month drop in the external debt level “was due to the effect of third currency depreciation against the US dollar that resulted in reduction of the peso value of third currency liabilities by P10.75 billion and net repayments amounting to P20.12 billion.”

“Peso devaluation over the period had a minimal effect” amounting to P140 million, it said.

National government domestic debt rose 0.5 percent year-on-year to P3.91 trillion and was up 0.3 percent from end-September. “For the month, the increase in domestic debt portfolio was mainly due to the net issuance of government securities. From the end-2015 level, domestic debt liabilities have scaled up by P33.44 billion or 0.9 percent,” it said.

‘Not alarming’

Singaporean banking giant DBS said the current level of national government debt is a not a cause for alarm but noted that monitoring fiscal spending is a must.

“The general public debt level is not really alarming for us. That includes the foreign debt portion, especially given that foreign reserves remain relatively high for now,” said DBS economist Gundy Cahyadi.

“Going forward, we need to monitor how much and how fast the government is committed in its spending program though. As this will definitely put some pressure on public debt going forward,” he added.

Meanwhile, debt guaranteed by the national government expanded by 27.1 percent to P560.6 billion from P440 billion a year earlier. Month-on-month, government-guaranteed debt decreased by P4.30 billion or 0.8 percent.
“The reduction in NG contingent liabilities was due to the collective effect of net repayments on domestic guarantees and currency depreciation on the peso value of third currency denominated guarantees amounting to P0.61 billion and P4.32 billion, respectively,” the BTr said.

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