NG debt declines in November

The national government’s outstanding debt decreased in November last year owing to a stronger local currency against the US dollar, the Bureau of the Treasury reported.

As of November, the total debt of the national government stood at R6.437 trillion, lower by one percent compared with R6.373 trillion registered in the previous month.

“Net repayments and a stronger peso contributed in lowering the end-month value of the debt,” the Treasury said.

The bureau noted the local currency appreciated from the previous month’s level of R50.686 to R50.346 at end-November.

Last month, domestic debt amounted to R4.208.20 trillion, a 0.2 percent decrease from October’s R4.2trillion.

“The reduction in domestic debt was due to net redemption of government securities amounting to R7.18 billion and diminution of the peso value of onshore dollar bonds amounting to R670 billion,” the treasury said.

Meanwhile, the government’s offshore debt declined by 2.5 percent month-on-month to R2.229.17 trillion.

“The lower figures were due to the combined effect of peso appreciation which lowered the peso value of external debt by R59.24 billion and net repayments amounting to R5.61 billion,” the treasury said.

“This was tempered by third-currency appreciation against the US dollar amounting to

R8.85 billion,” the bureau added.

Likewise, the treasury said total national government guaranteed obligations continued its downward trend at R478.79 billion as of November, which is 2.1 percent lower than the end-October level.

“The decline in NG guarantees was due to the combined effect of net repayments on both domestic and external guarantees amounting to R4.81 billion and R0.08 billion, respectively,” the Treasury said.

It likewise cited the impact of peso appreciation amounting to R7.50 billion, offsetting the R2.09 billion effect of third-currency appreciation against the US dollar.

From the end-December, 2016 level, the national government guarantees are lower by R34.86 billion or 6.8 percent year-to-date.

Earlier, National Treasurer Rosalia B. De Leon said the outstanding debt of the national government was expected to breach the R7-trillion mark next year as the Duterte administration boosts its spending on infrastructure.

De Leon disclosed that government debt will likely increase by 9.4 percent next year to R7.054 trillion from this year’s revised assumption of around R6.447 trillion.

The Treasury’s latest 2017 estimate is lower by 1.2 percent compared with the government’s earlier projection of R6.526 trillion set under the Budget of Expenditures and Sources of Financing (BESF) program.

“The 2017 projection is lowered because we expect very big collection from the BIR [Bureau of Internal Revenue] and BOC [Bureau of Customs] and then we are going to retire some of our mon- etary investments,” De Leon said.

Meanwhile, Finance Undersecretary and Chief Economist Gil S. Beltran said the government’s total outstanding debt remains very well manageable despite the projected increase in nominal terms.

The debt as a percentage of the country’s economy, or gross domestic product (GDP), will be equivalent to 39.7 percent next year, well below the 50 percent level that markets consider as sustainable, the finance official said.

“It’s just a number actually, it’s nominal. So even if the number increases the value of that debt decreases because over time it is subject to inflation. The best measure is actually percent of GDP because that is the level of resources that a country generates,” Beltran said.

The government’s debt-to-GDP dropped for the first time since early 1980s to below 50 percent during the Aquino administration.