NG debt rises due to peso weakening , higher local borrowing

The national government’s (NG) debt increased by double-digits in October owing to stronger US dollar against the peso along with higher domestic borrowing, data from the Bureau of the Treasury showed yesterday.

According to the Treasury report, the national government’s outstanding debt rose by 10 percent to 17.167 trillion as of October 2018 from 16.501 trillion in the same month last year.

Of that amount, domestic obligations reached 14.62 trillion, while foreign debt amounted to 12.546 trillion.

At end-October, local debt continued to rise by 9.6 percent to finance the expected budget deficit this year and support the Duterte administration’s ambitious infrastructure program.

Likewise, the foreign component of the total debt jumped 11 percent in October after the peso weakened to 153.527 from 151.686 in the same month last year.

For this year, the Duterte administration expects the government’s debt to reach 17.33 trillion from 16.65 trillion at end-December last year.

But by end-next year the government expects its debt to amount 18.12 trillion, with 11.9 trillion in additional borrowings as well as 11.14 trillion in principal payments programmed for 2019.

The government also plans to borrow up to 11.19 trillion next year to partly finance its budget, with a quarter of that expected to be met from external sources.

The 2019 borrowing program is about 20 percent higher than this year's 1996 billion, figures released by National Treasurer Rosalia de Leon showed.

The government plans to borrow up to 1294.2 billion from external sources and raise 1891.7 billion from the domestic market for next year's spending, de Leon said.

The Philippines is looking to raise as much as $2 billion via bond issues denominated in yen and US dollars before the year ends, but these are part of the 2018 financing program.

National Treasurer Rosalia De Leon said a euro bond issue is "another option we can explore for financing," but gave no other details about external borrowing plans for next year's budget.

President Rodrigo Duterte's administration is rolling out a massive $180billion "Build, Build, Build" program to construct new roads, bridges, railways, airports and seaports during his sixyear term that ends in 2022.

The government has vowed to maintain its aggressive spending strategy, which helped the domestic economy clock a robust 6.8 percent annual growth in the first quarter, until 2022.