THE outstanding debt of the national government hit the P6-trillion mark in September, rising significantly from a year earlier and from August on the back of a sharp depreciation of the peso against the US dollar and other major reserve currencies.
Data released over the weekend by Bureau of the Treasury (BTr) showed the national government’s outstanding debt climbed to P6.08 trillion in September from P5.93 trillion a year earlier, reflecting a 2.5 percent or P150.98 billion increase.
Month-on-month, the debt level rose by 1.78 percent from P5.980 trillion.
“The month-on-month change was attributed to the depreciation of the peso against the US dollar (a depreciation of almost P2.0) and third currencies that raised the peso value of the US dollar and third-currency denominated indebtedness by P86.91 billion and P2.39 billion, respectively,” the bureau said.
As a result, net repayments amounting to P3.48 billion did not have much of an impact on the overall debt level, it added.
Foreign borrowings in September were priced at P48.48 to a dollar, compared with P46.95 a year earlier, and P46.55 in August. The peso depreciated from 46.552 as of end-August to 48.482 as of end-September 2016.
IHS Markit Asia-Pacific chief economist Rajiv Biswas noted the depreciation in September was a key factor that pushed the external debt higher.
“Therefore, a key risk factor for the fiscal management of the external debt will be the exchange rate outlook for the peso against the USD,” he said.
With the US Fed expected to tighten policy rates in December and go for further tightening in 2017, the dollar could further appreciate against Asian currencies, including the peso.
“Therefore there is a risk that the USD would appreciate further against the peso in the coming months, which could further increase the peso value of the external debt despite government plans to reduce the external debt by making net repayments,” he added.
On the other hand, the local debt component rose by 0.5 percent year-on-year to P3.904 trillion. From August, the outstanding domestic obligations also rose by 0.5 percent, or P20.75 billion.
The BTr attributed the month-on-month increase in local debt to the twin effects of P19.79 billion in government securities issued and an upward adjustment in the peso value of onshore dollar securities, amounting to P960 million because of the peso depreciation.
Meanwhile, debt guaranteed by the national government expanded by 26.9 percent to P564.95 billion from P445.2 billion a year earlier. Month-on-month, government-guaranteed debt picked up by 2 percent or P10.3 billion from P554.02 billion.
“The adjustment is due to the combined effect of US dollar- (P12.93 billion) and third currency adjustments (P3.27 billion) that increased the peso value of external guarantees, offsetting the effect of net redemptions on both domestic and external guarantees, amounting to P3.20 billion and P2.07 billion, respectively,” the BTr said.