MANILA -- The National Government’s (NG) outstanding debt was recorded at P5,884 billion as of end-April 2016. Total NG liabilities is lower by 0.3% or P15.46 billion compared to the end-March level primarily due to the redemption of domestic debt. Meanwhile, total NG debt has declined by 1.2% or P70.88 billion from the beginning of the year.



NG domestic debt amounted to P3,769 billion, 1.9% or P71.95 billion lower than the end-March 2016 level. The reduction in domestic obligations reflects the net redemption of government securities amounting to P72.30 billion, offsetting the P0.35 billion effect of peso depreciation against the USD on the value of multi-currency denominated debt. Year-to-date, the level of domestic debt has decreased by 3.0% or P115.07 billion.



NG external debt amounted to P2,114 billion, 2.7% or P56.50 billion higher compared to the end-March 2016 level. The increase in external obligations was due to the weaker peso against the dollar and 3rd currencies which caused an upward revaluation of P40.18 billion and P16.18 billion, respectively. Net availments on the other hand added P0.14 billion to total external obligations. The external debt portfolio has increased by 2.1% or P44.20 billion since the start of 2016.



NG guaranteed obligations amounted to P458 billion, which increased by 3.5% or P15.28 billion relative to the prior month’s level. The increase in guaranteed obligations was due to the combined effect of peso depreciation against the dollar and 3rd currencies which raised the peso value of debt by P13.77 billion, net drawdowns on domestic guarantees from credit lines with LBP and DBP amounting to P1.19 billion, and net availments of external guarantees amounting to P0.32 billion. NG guaranteed debt has increased by 4.6% or P20.23 billion from its end-December 2015 level.



Finance Secretary Cesar V. Purisima noted the continued improvement in debt and risk metrics saying, “We are keeping our portfolio sustainable and resilient. Prudent liability management is an integral component of the virtuous cycle we are perpetuating to the benefit of every taxpayer.”



As of April 2016, domestic debt accounts for 64% of the total NG liabilities following an issuance strategy that heavily favors domestic sources of financing. Compared with its 56% share in 2009, the larger share of domestic debt mitigates exposure to unfavorable foreign exchange swings.



Refinancing risk has also abated given the ability to issue long dated securities. The average maturity of domestic and external debt stands at 9.29 and 12.39 years, compared to 4.61 and 9.54 years at the end of 2009, respectively. Both reside at the upper bound of the country’s medium-term debt maturity target of 7 to 10 years.



The extension in maturity was achieved without compromising cost considerations. Owing to the country’s improved fiscal management and investment grade credit, average borrowing costs have gone down to 5.38% and 4.45% for domestic and foreign debt from end-2009 levels of 7.43% and 5.71%, respectively. This further strengthens sustainability and frees fiscal space for economically productive spending. (DOF)