Philippine Government Debt Reaches P14.79 Trillion in January Amidst Weak Peso

The Philippine government’s debt stock witnessed a significant rise in January, reaching P14.79 trillion, as reported by the Bureau of the Treasury (BTr). This increase, marked at 1.9 percent month-on-month, is attributed primarily to the government’s heightened borrowing from local creditors, surpassing the amount repaid for maturing liabilities. The depreciation of the peso further exacerbated the situation, contributing to the increase in outstanding debt.

Local debt, constituting 68.71 percent of the total debt, escalated to P10.16 trillion, reflecting a 1.44 percent rise from the previous month. This uptick was driven by the net issuance of domestic securities, including Treasury bonds and bills, which saw a gross sale totaling P211.11 billion against a repayment of P69.67 billion in maturing local borrowings. This resulted in a net local financing of P141.44 billion for the month.

The peso’s weakening against the US dollar played a significant role in inflating the value of foreign currency-denominated debts. The Philippine currency depreciated to 56.403 against the dollar by the end of January, from 55.418 at December’s close, leading to an increase in the valuation of these debts by P2.81 billion.

External debt also saw a modest increase of 0.65 percent, climbing to P4.63 trillion. This rise was primarily due to the peso’s depreciation, which added P81.73 billion to the foreign debt total.

In light of the growing debt, Finance Secretary Ralph Recto announced plans for the Marcos administration to secure a total of P2.46 trillion in new borrowings from both domestic and international creditors during the year. This strategy aims to cover a projected budget deficit of P1.4 trillion, underscoring the government’s approach to managing its financial obligations amidst economic challenges.