Philippine Government Debt Reaches P14.24 Trillion in July
Government debt in the Philippines has reached P14.24 trillion in July due to continued borrowing, according to data from the Bureau of the Treasury. However, the peso’s appreciation against the US dollar has provided some relief.
The national government’s outstanding debt increased by 10 percent in July compared to the same month last year, and showed a slight uptick of 0.7 percent compared to the previous month, reaching P14.15 trillion. Of this total, approximately 68.9 percent originated from domestic sources, while the remaining 31.1 percent was obtained from external creditors.
The debt-to-GDP ratio, a crucial indicator of a country’s debt situation, improved to 61 percent as of the end of June 2023, down from 62.1 percent a year ago. This improvement reflects the ongoing recovery of the country’s economy from the impact of health and geopolitical events.
Maintaining a debt-to-GDP ratio below 60 percent is generally recommended by credit rating agencies as manageable and sustainable. However, the Philippines’ debt-to-GDP ratio currently exceeds this recommendation.
In July, domestic government debt increased by 11 percent year-on-year to P9.81 trillion, mainly due to the issuance of government bonds. Month-on-month, local financial obligations rose 1.1 percent. However, the impact of local currency appreciation against the US dollar on foreign currency-denominated securities held domestically offset this growth.
Foreign debt reached P4.43 trillion in July, marking a nine percent increase from the same month in the previous year. Nevertheless, this debt level is slightly lower by 0.3 percent compared to June, thanks to the impact of peso appreciation against the US dollar.
The Treasury noted that the peso’s appreciation offset the net impact of third-currency fluctuations and net availment of foreign loans. In July, the US dollar-Philippine peso exchange rate was 54.834, stronger than the rate recorded in the same month last year.
Looking ahead, the Marcos administration expects the national government’s total outstanding debt to climb to P15.842 trillion in 2024, representing an 8.3 percent increase from this year’s program of P14.623 trillion.
