Debt securities outstanding reached P8.77T in June

The stock of government securities, which account for the bulk of the country’s outstanding debt, hit a new high of 8.77 trillion pesos at the end of the first half of 2022.

With sustained domestic borrowing even amid rising interest rates, the nominal amount of treasury bills and bonds issued at the end of June rose from 8.67 trillion pesos in May, according to data from the Treasury Office ( BTr).

And with local creditors preferring longer maturities in times of uncertainty, exacerbated by the Russia-Ukraine crisis and aggressive tightening by central banks around the world, the stock of fixed-rate Treasuries soared further to 8, 22 trillion pesos in June, compared to 8.13 trillion pesos per year. a month ago.

Outstanding short-term treasury bills also increased to 544.2 billion pesos from 536.7 billion pesos a month ago.

Higher yields

Outstanding IOUs will rise again this month, as the BTr would borrow 200 billion pesos – 60 billion pesos in treasury bills and 140 billion pesos – in the domestic debt market.

Following Bangko Sentral ng Pilipinas’ off-cycle decision to raise the policy rate by 75 basis points to 3.25%, the BTr expects government-eligible brokers to demand higher yields.

The national government will borrow a total of 2.2 trillion pesos this year, of which 75% or 1.65 trillion pesos would be raised through the issuance of BTr debt securities. The Philippines prefers to source most of its borrowing locally to take advantage of a liquid financial system and to mitigate exchange rate risks.

Record P13.4T debt

The rest of the 560.6 billion pesos to be borrowed in 2022 will come from foreign sources, including concessional or low-interest official development assistance loans from bilateral and multilateral lenders and commercial fundraising through offshore bond issues.

Borrowing will also increase the stock of national government debt to a record high of 13.4 trillion pesos by the end of 2022. With economic growth projected at a slightly slower pace of 6.5% to 7.5 % vs. 7% to 8% previously, the debt-to-gross domestic product (GDP) ratio will end 2022 at 61.8%, up from the 16-year high of 60.5. percent last year.

For the years 2023 to 2028, the Marcos administration plans to raise 80% of its annual funding from local creditors. A more ambitious GDP growth target of 6.5% to 8% per year would gradually reduce the public debt ratio to 52.5% by 2028. INQ

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