Government debt climbs to ₱8.6 trillion in April

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Metro Manila (CNN Philippines, June 2) — The Bureau of the Treasury reported on Tuesday that total government debt further grew in April due to issuance of domestic securities and borrowing more money abroad to help fund its COVID-19 response.

The agency reported that national debt rose 1.5 percent compared to the previous month’s revised figure at ₱8.47 trillion to “reflect the ₱300 billion short-term borrowing through the repurchase agreement with the Bangko Sentral ng Pilipinas (BSP).” Data showed that debts also increased year-on-year by 10.4 percent.

Total domestic debt increased 12.6 percent to ₱5.86 trillion as peso-denominated government securities grew 6.9 percent, year-on-year. Meanwhile, to date, total domestic debt increased 14.4 percent.

In April alone, peso appreciation slightly weighed down on-shore dollar bonds by ₱170 million in April alone. The Treasury reported that the peso continued its good performance against US dollar, improving to ₱50.44:$1 in May versus the ₱50.78 rate in April.

The remaining ₱2.74 trillion was sourced from foreign lenders, which grew 6 percent compared to April 2019. Year-to-date, this grew 5.1 percent.

External loans for April amounted to ₱87.34 billion as the government raises financing to fight the spread of COVID-19 in the country.

Meanwhile, the national government set aside ₱477.68 billion in April for guaranteed payments. This is down 1.1 percent versus the previous year due to local and foreign redemption of guarantees at ₱3.24 billion and ₱10 million, respectively, as well as due to currency adjustments that trimmed P800 million to the value of external guarantees.

Government borrowings were expected to increase by April as it injects additional funds to its programs to fight COVID-19, and also due to a ₱560.5-billion decline in state revenues as businesses temporarily stop operations and consumers are unable to shop.

The administration opted for more foreign borrowings, with the addition of ₱310 billion to support local efforts to fight the virus plus a $2.35-billion dollar bond float.

Despite this, the government is confident it will be able to pay loans. BSP Governor Benjamin Diokno said that the country’s sound fiscal and monetary state and modest budget deficit placed it in a strong position prior to the pandemic.