Weak peso pushed gov’t debt to P17.56T in Oct
The continued depreciation of the peso against the US dollar pushed the national government’s (NG) debt to climb to P17.56 trillion in October, despite posting a budget surplus for the month, latest data from the Bureau of the Treasury (BTr) show.
The debt stock rose by P106.78 billion from the previous month, or 0.61 percent higher, once again overshooting the Marcos administration’s full-year borrowing target of P17.36 trillion, or by 1.13 percent.
The increase breaks a two-month easing of the national government’s debt, which had slightly stabilized in August and September.
The debt stock of P17.56 trillion marks a return to record-high levels last seen in July.
This comes with the peso’s continued depreciation, which hit one of its lowest levels last Oct. 28, closing at 59.13 to the dollar amid the flood control corruption controversy.
That same controversy, which heavily restrained government spending, contributed to a 76-percent jump in the national government’s budget surplus in October.
In theory, the budget surplus should have reduced the government’s debt.
However, the weak peso inflated the peso-equivalent value of the country’s foreign obligations, pushing the total debt higher despite the surplus.
While the October budget surplus marked its first gain since April, economists said this was a “weak fiscal impulse” instead of fiscal strength due to the circumstances.
“The expansion was driven by net issuances of domestic and external liabilities, as well as due to the upward revaluation effects of the weaker peso against the US dollar,” the Treasury said.
At end-October, domestic debt made up the bulk of the total debt load at 68.6 percent after rising to P12.05 trillion.
“The net issuance of government securities for the month amounted to P70.65 billion, and as peso depreciation added P1.78 billion to the local currency valuation of retail dollar bonds,” BTr said.
External debt, meanwhile, increased to P5.52 trillion, boosted by P58.64 billion from peso depreciation.
Domestic debt securities totaled P12.04 trillion, up 0.58 percent from P11.97 trillion in the preceding month, while external obligations stood at P2.81 trillion, a 0.72 percent increase from P2.79 trillion the previous month.
Even so, major credit watcher S&P Global Ratings recently affirmed the country’s long-term credit rating at triple B plus (BBB+) with a positive outlook, signaling confidence that the economic slowdown is temporary.
According to S&P, the country could recover in one to two years on the back of ongoing fiscal consolidation, stabilized debt levels and a robust external position.
“The Bureau reaffirmed its commitment to prudent debt and risk management, ensuring that borrowings remain aligned with the government’s long-term fiscal sustainability goals and supportive of a thriving and stable macroeconomic environment toward a prosperous and more inclusive future for Filipinos,” the BTr added.
