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THE government cut its debt last year as it prepaid
obligations to take advantage of the peso’s strength vis-à-vis
the dollar.
Data from the Bureau of
Treasury showed that obligations at end-December stood at P3.712
trillion, or 3.6 percent lower than the P3.851 trillion outstanding
in 2006.
Of the total debt outstanding,
P2.201 trillion was owed to domestic creditors, while the remaining
P1.511 trillion was due foreigners.
The government’s domestic
borrowing had increased from P2.154 trillion in 2006 as the Arroyo
administration shifted to more loans from the local market to take
advantage of low interest rates and mitigate the peso’s rapid
appreciation.
Last year’s foreign borrowing
dropped from P1.697 trillion in 2006, with P46 billion accounting
for the peso’s appreciation against the greenback, and P13 billion
arising from third currencies’ strength vis-à-vis the US unit.
This was partially offset by P1 billion in net profits. .
The government has been prepaying
its more expensive foreign-currency debt to take advantage of the
stronger peso, which translates to a smaller amount of dollars
required to pay down the said obligations.
The contingent debt of the
government, composed mainly of guarantees issued on behalf of
state-run firms, declined to P484 billion, lower by P15 billion
against the end-November level of P499 billion.
“The decrease was brought
about by the P14-billion net appreciation of the peso and the third
currencies against the US dollar and P1-billion net repayments,”
the bureau said.
Month on month, the end-December
debt dipped by P39 billion from the November level.
The end-December domestic
debt increased by P19 billion, or 0.9 percent from the previous
month, while foreign debt declined 3.7 percent over the same period.
--Chino S. Leyco
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