Debt rises as government borrows more, peso weakens

MANILA - The Philippines’ sovereign debt hit a record P14.1 trillion at the end of May, the Bureau of Treasury said on Tuesday.

The country’s debt grew by P185.4 billion or 1.3 percent from the previous month as the Philippines borrowed more, and as peso weakened against the US dollar.

More than two-thirds or 68 percent of the total debt stock were domestic borrowings, while less than a third or 32 percent was borrowed from foreign lenders, Treasury said.

Domestic debt amounted to P9.59 trillion, P130.67 billion or 1.4 percent higher compared to the end-April 2023 level.

“Moreover, the impact of peso depreciation against the US dollar padded the value of onshore foreign currency-denominated securities by P1.56 billion,” Treasury said.

Since the start of the year, domestic debt has increased by P380.13 billion or 4.1 percent.

Foreign debt amounted meanwhile rose to P4.51 trillion, which is P54.73 billion or 1.2 percent higher from end-April.

“External debt was mainly driven by the net availment of external loans amounting to P10.05 billion and the impact of local-currency depreciation against the US dollar amounting to P59.7 billion.

Since the start of the year, foreign debt has increased by P297.56 billion or 7.1 percent.

In less than a year since assuming the presidency, the administration of President Ferdinand Marcos Jr has added around P1.31 trillion to the country’s debt.

• Philippine national debt at P12.79 trillion as of end-June 2022

The Philippines’ sovereign debt ballooned during the pandemic as the administration of former President Rodrigo Duterte borrowed heavily to fund its COVID-19 response. Duterte’s ambitious infrastructure push also contributed to the higher debt levels.

Economic managers however have said that the debt level remains manageable as economic growth can outpace the cost of servicing debt.

The government earlier said its debt-to-GDP ratio improved to 60.9 percent in 2022.

• Philippines has ‘limited fiscal space’ as debt levels rise in Asia: ADB