Higher borrowings, weak peso hike debts to P3.88T

By Ruben Hortelano

06/11/2008

Increased borrowings to primarily fund a subsidy scheme for the poor and higher government spendings to cushion the effect of a global economic slump resulted in the government’s debt to shoot up by 2.9 percent or about P110 billion more to P3.88 trillion in March from P3.77 trillion the previous month, according to the Bureau of the Treasury (BTr).

The Treasury, nevertheless, said the latest figure is P50 billion less than the P3.93 trillion of total government debts a year ago.

Bulk of the debt or about 59 percent amounting to P2.29 trillion consists of domestic borrowings while the remaining 41 percent or about P1.6 trillion accounts for foreign obligations.

Government data show domestic debts rising 1.6 percent or P36 billion from February to P2.286 trillion as a result of more government debt papers being sold than redeemed during the month.

Foreign currency debts also rose nearly 5 percent or by P74 billion to P1.597 trillion.

The Department of Finance (DoF), however, indicated foreign currency debts fell P27 billion due to a stronger dollar.

The currency cost was offset in part by net repayments of some P2 billion during the month, the DoF said.

The bulk or 89 percent of foreign debts were in the form of US dollar bonds or notes and the rest were denominated in either Japanese yen or the European Union’s euro.

Contingent debt, or those incurred with state guarantee, also contracted by 6.7 percent to P519.6 billion in March from P557.2 billion a year ago.

Contingent domestic debt, however, rose from a month ago by 1.1 percent to P72.9 billion while contingent foreign debt contracted by 7.9 percent to P446.7 billion from P485.1 billion.

Analysts partly attribute the higher debt level to the peso weakening against the dollar and other foreign currencies.

The peso has reversed its record last year as the region’s best performer, falling 7.11 percent against the dollar so far this year to become Asia’s third-worst performer.

At the end of the first quarter, the peso had lost around one percent of its value against the dollar.

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