Government debt rises to P4.718 T as of end-2010

MANILA, Philippines – The National Government (NG) registered total debt of P4.718 trillion at the end of last year, higher by P321.5 billion from the 2009 level of P4.396 trillion, latest data from the Bureau of the Treasury showed.

However, compared to the end-November 2010 level of P4.719 trillion, the government’s end-December 2010 debt stock was lower by P1 billion.

Of the total debt, the government owed P2 trillion or 42.4 percent to foreign creditors while P2.718 trillion or 57.6 percent is owed to local lenders.

The end-2010 debt stock went up from the end-2009 level because of an increase in both domestic debt and foreign debt, data from the Treasury showed.

Theoretically, at this level, each of the 94 million Filipinos is indebted by roughly P46,240.

Data also showed that as of end-December 2010, domestic loans were recorded at P2.728 trillion or 10 percent higher than the P2.470 trillion recorded in 2009.

Similarly, foreign debt went up 3.8 percent to P2 trillion from the end-2009 level of P1.926 trillion.

Meanwhile, the Treasury attributed the month-on-month decline in the National Government’s end-December 2010 debt to a decline in foreign debt in December compared to November.

“The decrease in the National Government’s foreign debt of P2 billion from the level as of end -November 2010 was brought about by the P5 billion net repayment and P16 billion appreciation of the peso against the US dollar. This however was partially offset by the P18 billion net appreciation of the third currencies against the US dollar and P1 billion adjustment resulting from late receipt of notices of availment.

Domestic debt, on the other hand, increased by P1 billion from the previous month’s level due to the net issuance of government securities by the NG.

On the other hand, the contingent debt of the NG increased to P550 billion, lower by P10 billion from the end-November 2010 level of P560 billion.

Contingent debt is composed mainly of guarantees issued by the NG.

The Treasury attributed the decrease in domestic contingent obligations to the misclassification of the P12 billion Home Guaranty Corp. (HGC) guaranteed Pag-IBIG bonds as NG direct guaranteed loan.

The increase in foreign contingent obligations, meanwhile, was due to the combined effects of the P3 billion appreciation of the peso against the dollar, P2 billion net repayment and P7 billion net appreciation of the third currencies against the US dollar.

The Aquino administration hopes to slash the budget deficit as a ratio of gross domestic product to two percent in 2013 from the projected 3.9 percent this year.

However, it expects the budget gap to hit roughly P300 billion this year or 3.2 percent of gross domestic product (GDP).

Last year, the budget gap hit P314.4 billion or 3.7 percent of GDP. –Iris C. Gonzales (The Philippine Star)