Dec 052014

MANILA, Philippines – The government’s outstanding debt slightly rose in October as the state continued to rely on borrowings to support its expenditure program.

Data released by the Bureau of Treasury showed that the outstanding debt of the government stood at P5.71 trillion as of the end of October, up  1.2 percent or

The latest figure, however, was lower than the P5.72 trillion registered in September due to the net redemption of government securities.

A bigger portion or P3.75 trillion was accounted for by borrowings from the domestic market.  This marked a 0.1 percent decline from that in the same period a year ago.

The balance of P1.96 trillion came from borrowings from foreign sources.  This was down year on year by 0.3 percent.

The government borrows to help address the estimated budget deficit for any given year.

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“Debt indicators highlight the steady improvement in the composition of government debt.  The high concentration of debt denominated in local currency helps mitigate the impact of foreign exchange fluctuations on 67.5 percent of the whole portfolio,” the BTR said in a statement.

The BTR added that the borrowing strategy of issuing mid-to-long-term bonds has maintained the average maturity of government debt at 10.08 years to help minimize refinancing risks.

Guaranteed debt fell 7.8 percent or P37.7 billion, driven by declines in the level of domestic (P21.8 billion) and external (P15.9 billion) obligations.

The government maintained a policy of tapping more debts from the domestic market and less from foreign creditors to avoid incurring too much foreign exchange risks.

For next year, the government intends to return to the international debt market given the continued depreciation of the peso against the US dollar. It is eyeing about $750 million from the offering.

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