Weak peso bloats government debt to 5.9 trillion in Jan.

The national government’s debt rose in January this year due to weak local currency against the US dollar, data from Bureau of the Treasury showed yesterday.

As of January 2016, the treasury reported that debt stock of the national government stood at 5.9 trillion, up 2.6 percent from 5.751 trillion in the same period last year.

Of the total debt, domestic obligation accounted for about 64.81 percent, while the remaining 35.19 percent is to offshore investors.

“The increment in external obligations was due to the impact of peso weakness on dollar-denominated debt that raised the peso value,” the treasury said in a statement.

At end- January, government debt in the overseas markets jumped 7.9 percent to 2.076 trillion from 1.923 trillion in the previous year.

On the other hand, local debt slightly declined by 0.1 percent as of January this year from 3.828 trillion last year to 2.824 trillion.

Meanwhile, the treasury reported that month-on-month, government debt decreased 0.9 percent from 5.954 trillion due to net redemption of domestic government securities.

In January, domestic debt fell 1.6 percent from 3.884 trillion in the previous month, while offshore debt slightly increased by 0.3 percent from 2.07 trillion in December last year.

“For January, the decrease in domestic obligations was due to the net redemption of government securities amounting to 60.57 billion offsetting the 300 million upward adjustment in the peso value of foreign currency domestic liabilities,” the treasury said.

At end-2015, the national government’s outstanding debt increased to 5.952 trillion after state revenues came short of targets to meet the annual spending requirement of the Aquino administration.

But despite the increase in nominal value of government debt, its proportion to the country’s economy continued to decline.

With 2015 gross domestic product (GDP) growth reaching 5.8 percent, debt in proportion to the economy has kept a gradual downward trajectory to 44.8 percent in 2015 from 45.4 percent a year ago.

The improvement in the debtto- GDP ratio, a usual measure of sustainability, can be attributed to the sustained accelerated pace of economic growth in tandem with disciplined fiscal spending that moderated borrowing requirements for the year.

Finance Secretary Cesar V. Purisima said the Philippines is fully committed to a proactive liability management strategy to keep government’s debt structure resilient.

“I am optimistic we can further trim down our debt- to- GDP ratio, which from 52.4 percent in 2010 has narrowed to 44.8 percent in 2015, a 7.6 percentage point difference,” Purisima said.

For 2016, the national government expects its debt stock to reach 6.422 trillion.