Philippines: Debt hits record $264.bln in June

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The issuance of domestic securities and the continued weakening of the peso pushed the country's debt to P15.48 trillion in June, another fresh high in outstanding obligations, the Bureau of the Treasury said.

Latest data from the Treasury showed the national debt settled at P15.483 trillion as of end-June, its highest level to date.

This is also 9.4 percent higher than the P14.15 trillion debt in the same month last year.

For June alone, the government added P135.9 billion to the debt pile due to the net issuance of both domestic and external debt and the impact of local currency depreciation on the valuation of foreign currency-denominated debt.

The peso started depreciating against the US dollar in May, marking its worst showing in nearly two years, after the US Federal Reserve signaled the possibility of a delayed monetary policy easing.

The local currency further weakened in June at 58.658 versus 58.524 the month prior. For most of June, the peso traded at almost 20-month lows and fell by almost six percent.

The Bangko Sentral ng Pilipinas, however, said the peso's depreciation is only temporary due to market sentiment on how the Fed would move in terms of monetary policy.

As of June, the outstanding debt was already 96.3 percent of the 2024 debt expectation of a record P16.06 trillion.

The debt pile piercing the P16-trillion mark has been revised upward from the previous P15.84-trillion projection after the government submitted its record P6.352-trillion budget proposal for 2025.

The Treasury said the majority or 68.29 percent of the debt pile were domestic borrowings while the remaining 31.71 percent were sourced externally.

Total domestic debt at P10.57 trillion inched up by 1.2 percent on a monthly basis due to the net issuance of government securities worth P129.89 billion, as well as the P390-million effect of the weak peso.

It also jumped by nine percent from the P9.7 trillion in debt in June 2023.

External obligations, on the other hand, were almost flat at P4.91 trillion month-on-month, but grew by 10.5 percent from P4.45 trillion on a yearly basis.

The Treasury said this was attributed to the P7.95 billion in net foreign loan availment and P11.23 billion in upward revaluation of US dollar-denominated debt.

This was partially offset by the P13.56-billion effect of favorable third-currency adjustments.

Further, the government's guaranteed obligations went down by 1.9 percent to P343.65 billion due to the net repayment on both domestic and external guarantees worth P5.02 billion and P730 million, respectively.

The impact of third-currency adjustments against the US dollar amounting to P1.18 billion was able to offset the P370 million increase caused by the depreciation of the peso.