THE NATIONAL GOVERNMENT’S (NG) outstanding debt slipped to P17.47 trillion at the end of August, but still remained above the full-year projection, data from the Bureau of the Treasury (BTr) showed.
The latest data from the Treasury showed outstanding debt dipped by 0.5% in August from the record-high P17.56 trillion at end-July.
Despite the decline, the debt level is still 0.63% higher than the projected year-end level of P17.36 trillion.
Year on year, NG debt jumped by 12.3% from P15.55 trillion at the end of August 2024, the BTr said.
“This (debt reduction) was mainly due to the government’s full repayment of its biggest local bond for the year, worth P516.34 billion, and a stronger peso, which reduced the value of the country’s external debt,” the BTr said.
NG debt is the total amount owed by the Philippine government to creditors such as international financial institutions, development partner-countries, banks, global bondholders and other investors.
In August, the bulk or 69.2% of the debt stock came from domestic sources, while external obligations made up the rest.
“The debt reduction was accompanied by an improvement in the country’s debt profile as the share of domestic debt to total borrowings increased to 69.2% from 68.9% in the previous month,” the BTr said.
A larger share of domestic borrowings in the country’s debt profile reflects “a generally more favorable debt position” as local debt is less vulnerable to shifts in foreign exchange movements, it added.
Domestic debt, which was composed of government securities, slid by 0.2% to P12.09 trillion as of end-August from P12.11 trillion as of end-July. It also rose by 12% annually from P10.79 trillion in August last year.
This was already 0.35% higher than the P12.04-trillion year-end domestic debt projection.
“Year to date, the NG raised P1.84 trillion in gross domestic financing, including the highly successful issuance of Retail Treasury Bond Tranche 31 (RTB-31),” the BTr said.
On the other hand, external debt fell by 1.4% to P5.38 trillion in August from P5.46 trillion in the previous month. This also exceeded the P5.32-trillion external debt projection this year by 1.24%.
“The reduction was attributed primarily to the effect of a stronger peso on external guarantees. Guaranteed obligations remained well-managed at only 2% of total NG debt,” the Treasury said.
Year on year, foreign debt climbed by 13.1% from P4.76 trillion.
Foreign debt was composed mainly of P2.74 trillion in global bonds and P2.64 trillion in loans.
External debt securities were made up of P2.32 trillion in US dollar bonds, P253.39 billion in euro bonds, P58.5 billion in Japanese yen bonds, P57.04 billion in Islamic certificates and P54.77 billion in peso global bonds.
For August, NG-guaranteed obligations slipped by 1.8% to P346.46 billion from the end-July level of P352.97 billion.
Year on year, it fell by 5.5% from P366.57 billion.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort attributed the minimal monthly decline in outstanding debt to the net payments of large debt maturities.
“This is somewhat expected for large debt maturities paid to reduce outstanding debt but offset by new NG borrowings to finance the NG budget deficit,” he said in a Viber message.
In August, the BTr raised P507.16 billion through its RTB offering.
Mr. Ricafort warned that total outstanding debt may breach the government’s P17.36-trillion projection by yearend, citing upcoming payments for maturing securities in September.
“(It) could still go up after payment of large NG debt maturities until September 2025,” Mr. Ricafort said.
John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said the modest decline in debt may be temporary, citing scheduled repayments and favorable foreign exchange movements.
Mr. Rivera noted that NG debt remains 12.3% higher year on year and is likely to climb further, “likely staying above” P17.4 trillion by yearend.
At the end of the second quarter, NG debt as a share of gross domestic product surged to 63.1%, the highest since 2005.
The Department of Finance expects the NG debt-to-GDP ratio to ease to 61.3% by end-2025 and eventually fall to 58% by 2030. — Aubrey Rose A. Inosante
