DOF: PHL manages to extend debt maturities

Philippine authorities were able to extend the maturity of the country's foreign and domestic liabilities by almost a year in the first six months of the term of President Benigno Aquino III, using a more proactive approach to debt management. Government debt maturity was extended to December 2010 from 7.9 years as of June last year, Finance Secretary Cesar Purisima said in a statement Tuesday. President Aquino was sworn into office on June 30, 2010, replacing former President and now Pampanga Rep. Gloria Macapagal-Arroyo. The “bond swaps the administration undertook since its assumption" were main responsible for extending the debt settlement dates, Purisima said. “Lengthening our maturities has been one of our key goals at the Department of Finance and we are happy that steps we undertook since July last year are now bearing fruit," he said. Data from the Bureau of Treasury showed that the maturity for domestic liabilities was extended to 6.66 years from 5.45 years while that of foreign obligations was increased to 11.37 years from 10.8 years. National government debt includes Treasury bills, Treasury bonds, retail Treasury bonds, and loans obtained from multilateral lenders like Asian Development Bank and World Bank, among others. The debt also includes liabilities assumed from government-owned and controlled corporations. The current debt profile gives the Aquino administration more time to make the domestic economy better, according to the Finance Department. "There is more time to improve the economy so that by the time our debts mature, we will have enough capacity to settle them. There will also be more resources for the government to finance infrastructure projects and social programs which would contribute to economic growth and the government’s drive against poverty," Purisima added. Otherwise, the resources would have been allocated for debt payments that do not have a direct effect to the public, the department said. Government has no target in terms of average maturity but will continue to pursue measures to improve our debt position, said National Treasurer Roberto Tan. Finance Undersecretary Rosalia de Leon said that the actions are not limited to bond swaps as government is trying to maximize official development assistance (ODA) loans that have long maturities. “Also, we have been stretching [the] tenor of our borrowings to as long as 25 years which is the longest provided under the law," she added. Government debt stood at P4.740 trillion as of January this year, of which about 56 percent or P2.675 trillion are owed to domestic creditors and 44 percent or P2.066 trillion to foreign creditors. — VS, GMA News