RP debt rises as govt increases borrowing

The Philippines’ national debt increased in May this year as government borrowed more from investors, helping it raise cash to bankroll spending and narrow its burgeoning deficit. As of May, the Philippines’ total outstanding debt reached P4.22 trillion, 7.5 percent higher than the P3.927 trillion worth of obligations incurred during the same month last year, data from the Bureau of the Treasury (BTr) showed. Some P2.394 trillion worth of government securities were sold in May, 5.2 percent higher than the P2.275 trillion domestic debt notes bought by investors during the same period last year. Debt sale proceeds are expected to be used for infrastructure spending and increased allotments for social services. In turn, these expenditures are seen to boost the Philippine economy. Government agencies borrowed P7 billion in May, 65.7 percent lower than the P20.1 billion incurred during the same month last year. Meanwhile, foreign currency denominated debt papers issued by the Philippines rose to P943.7 billion, 10.1 percent higher than last year’s issuance. Contingent debt, composed mainly of guarantees issued by government, increased to P588 billion, 11.8 percent higher than the P525.9 billion recorded in the same period in 2008. Of the total outstanding debt, 43 percent – or P1.817 trillion – is owned to foreign creditors while P2.403 trillion or 57 percent were obtained from domestic creditors. However, for the month of May, foreign debt fell by P40 billion compared to April figures as the peso strengthened against the dollar and the government paid some P2 billion worth of loans before these fell due. Nevertheless, the drop was “partially offset" by the P10 billion net appreciation various foreign currencies against the US greenback. The peso hit a low of P48 to P49 against the greenback in May from a high of P47 during the first week of May. The government is expected to post a P250 billion deficit this year, or 3.2 percent of the gross domestic product from a revised deficit cap of P199.2 billion. Last month, the government was able to raise $750 million in new overseas borrowings via a dollar-denominated global bond sale, its second ever since it undertook a similar $1.5 billion transaction in January. Manila is also finalizing plans to sell Samurai bonds also known as yen-denominated securities worth $1 billion this year. - GMANews.TV