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Saturday, July 13, 2024

Gov’t deficit, debt metrics improved in first quarter

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The Philippine government’s budget deficit and debt metrics improved in the first quarter of 2024 as the economy continued to expand, according to data released Friday by the Bureau of the Treasury.

“With the release of the Q1 2024 gross domestic product [GDP], which grew by 5.75 percent year-on-year, the national government’s fiscal deficit settled at 4.46 percent, compared with 4.82 percent for the same period in 2023,” the Treasury said in a statement.

The debt-to-GDP ratio was 60.15 percent in the first quarter, down from 61.05 percent a year ago and 60.10 percent at the end of 2023.

The government is projecting a full-year deficit of 5.6 percent of GDP in 2024, lower than 6.2 percent in 2023, in line with efforts to consolidate finances. The debt ratio is programmed at 60.3 percent under the revised Medium-Term Fiscal Framework (MTFF).

Actual budget deficit in March narrowed to P195.9 billion from last year’s P210.3 billion on the back of an 11.3-percent year-on-year revenue growth and a 3.18-percent increase in government spending.

This led to a first-quarter budget gap of P272.6 billion, a slight increase of 0.65 percent from P270.9 billion recorded in the same period last year.

The government’s outstanding debt reached P14.93 trillion as of the end-March 2024, down 1.67 percent from the previous month due to the net redemption of domestic government securities.

Data showed that of the total debt stock, 31.14 percent was external debt, while 68.86 percent represented domestic borrowings.

The government returned to the international capital markets on May 7, 2024 with a $2-billion dual-tranche offering of 10-year and 25-year fixed-rate global bonds. The 25-year bonds will be issued under the Republic’s Sustainable Finance Framework, marking its fifth G3 ESG bond offering.

This transaction follows a series of bond issuances in 2022 and 2023, including a $1-billion 5.5-year Sukuk in December 2023, a $3-billion triple-tranche bond offering in January 2023, a $2-billion triple-tranche bond offering in October 2022, a 70.1-billion-yen four-tranche Samurai bond offering in April 2022 and a $2.25 billion triple-tranche bond offering in March 2022.

The new 10-year tranche was priced at T+80 basis points (bps), reflecting a tightening of 40 bps from initial price guidance. The new 25-year Sustainability tranche was priced at 5.60 percent at par (T+99.8 bps), or 45 bps tighter than the initial price guidance.

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