Public Borrowing "Structure of Philippine Public Debt"

1. STRUCTURE OF
PHILIPPINE PUBLIC
DEBT
1990 to date
PUBLIC FISCAL ADMINISTRATION

2. Four Stages of Public Debt

3. CROSS-SECTION
SOURCES CATEGORIES MATURITY
Guaranteed
Direct and Non
Debt
Borrowings Guaranteed
Debt
Short- Medium Long-
Domestic Foreign
Term -Term Term
Commercial
National Local GOCCs Monetary
Institutions
Bilateral
Multilateral

4. Profile of Domestic Public Debt
December 2001 data indicate that
Domestic Public Debt by
outstanding domestic public debt reached
P1.25 trillion, equivalent to $24.3 billion.
Maturity
Dec. 1995
Treasury bills and bonds account for 98% of
domestic public debt. Similar to the maturity Short-Term Medium-Term Long-Term
structure of total public debt, domestic debt 20.0%
has substantially lengthened over the years.
In 1995, short-term domestic debt 54.5%
accounted for more half of domestic debt.
25.6%
This fell to 34 percent in 2001. The share of
medium-term domestic debt rose from 26
Domestic Public Debt by
percent in 1995 to 32 percent in 2001. Long-
term domestic debt sharply increased its
Maturity
Dec. 2001
share by 14 percent from 1995 to 2001. This
has caused the average length of treasury Short-Term Medium-Term Long-Term
bonds to reach six years. Most of the
34.1%
treasury bonds will mature between 2002 33.5%
and 2007 with the largest bunching of
maturities occurring in 2003. 32.3%

5. Profile of Domestic Public Debt
(cont’d)
Treasury Bonds
Maturity Profile
160
140
120
(In Billion PHP)
100
80
60
40
20
0
2001
2004
2007
2010
2013
2016
2019
2022
2025

6. NG Domestic Debt
Nominal GDP Domestic
Year Domestic
current PHP to GDP Ratio
1990 300,441 1,077,237 27.89%
1991 337,890 1,248,011 27.07%
1992 497,917 1,351,559 36.84%
1993 676,867 1,474,457 45.91%
1994 664,978 1,692,932 39.28%
1995 718,395 1,905,951 37.69%
1996 742,057 2,171,922 34.17%
1997 749,608 2,426,743 30.89%
1998 850,931 2,665,060 31.93%
1999 978,404 2,976,905 32.87%
2000 1,068,200 3,354,727 31.84%
2001 1,247,683 3,631,474 34.36%
2002 1,471,202 3,963,873 37.12%
2003 1,703,781 4,316,402 39.47%
2004 2,001,220 4,871,555 41.08%
2005 2,164,293 5,444,039 39.76%
2006 2,154,078 6,032,835 35.71%
2007 2,201,167 6,648,245 33.11%
2008 2,414,428 7,497,535 32.20%
Jun-09 2,376,089 7,537,612 31.52%

7. Profile of Foreign Public Debt
As of December 2001, foreign Foreign Public Debt by Creditor
public debt amounted to P1.14 Dec. 1995
trillion or $22.08 billion. Data
Commercial Bilateral Multilateral
indicate that there is a shift in
creditor profiles. There is a 34.1%
marked preference for 23.8%
commercial creditors, with their
share increasing from 34 percent
in 1995 to 48 percent in 2001. 42.1%
The increased role played by
lenders is attributable to the Foreign Public Debt by Creditor
Dec. 2001
country’s renewed access to the
voluntary debt markets. On the Commercial Bilateral Multilateral
other hand, the shares of 19.6%
multilateral and bilateral sources 47.6%
fell during the same period.
32.8%

8. Profile of Foreign Public Debt
(cont’d)
Foreign public debt has Foreign Public Debt
remained largely long- Maturity Profile
term, although the
government started to 3000
increase its medium-
term foreign 2500
(In Million USD)
borrowings in 2000.
2000
Most of the foreign
debt will mature in the 1500
next ten years.
Maturities are expected 1000
to steadily decline after
2010. Currently, the 500
average length of
foreign public debt is 0
2022
2001
2004
2007
2010
2013
2016
2019
2025
2028
2031
2034
2037
2040
eleven years.

9. Profile of Foreign Public Debt (cont’d)
In terms of currency
profile, foreign public debt Foreign Public Debt by Currency
continues to be dominated by Dec. 1995
US dollar and Japanese yen US Dollar Japanese Yen
debt, accounting for more than Euro French Franc
90 percent of foreign public Deutsche Mark Other Currencies
debt. It is worth .8% .9% .7%
noting, however, that over the 0%
past seven years there has 46.6% 51%
been increased bias for USD-
denominated debt as
compared to JPY-denominated
debt. From 1995 to 2001, the Foreign Public Debt by Currency
share of USD-denominated Dec. 2001
debt in foreign public debt US Dollar Japanese Yen
increased from 51 percent to Euro French Franc
58 percent. On the other Deutsche Mark Other Currencies
.3%
hand, share of JPY- 0.6% 4.6%
denominated debt fell from 47
3.5%
percent to 34 percent during 57.6%
the same period. 33.5%

10. NG Foreign Debt
Nominal GDP Foreign
Year Foreign
current PHP to GDP Ratio
1990 299,764 1,077,237 27.83%
1991 334,898 1,248,011 26.83%
1992 372,897 1,351,559 27.59%
1993 449,025 1,474,457 30.45%
1994 416,177 1,692,932 24.58%
1995 440,227 1,905,951 23.10%
1996 413,180 2,171,922 19.02%
1997 600,966 2,426,743 24.76%
1998 645,290 2,665,060 24.21%
1999 796,952 2,976,905 26.77%
2000 1,098,510 3,354,727 32.75%
2001 1,137,234 3,631,474 31.32%
2002 1,344,266 3,963,873 33.91%
2003 1,651,327 4,316,402 38.26%
2004 1,810,734 4,871,555 37.17%
2005 1,723,938 5,444,039 31.67%
2006 1,697,428 6,032,835 28.14%
2007 1,511,320 6,648,245 22.73%
2008 1,806,475 7,497,535 24.09%
Jun-09 1,851,018 7,537,612 24.56%

11. Since the Philippines fell into a debt crisis in
1983, the management of public debt has
emerged as one of the persistent issues
hounding the Philippine economy. Over the
years, the country strived hard to lessen the
debt burden in order to free resources for
development. In fact, during the nineties,
though the debt stock continued to increase,
most reviews have indicated that the public
debt was sustainable. The Philippines proved
its resilience when it weathered the 1997
financial crisis while other Southeast Asian
economies suffered meltdowns arising from
debt-related liquidity problems.

12. SYSTEM FOR PUBLIC DEBT MANAGEMENT
What is Public Debt Management and Why is it Important?
Governments should ensure that both the
It is the process of establishing
level and rate of growth in their public debt
and the executing a strategy for
is fundamentally sustainable, and can be
managing the government’s
serviced under a wide range of
debt in order to:
circumstances while meeting cost and risk
-raise the required amount of
objectives.
funding
-achieve its risk and cost
objectives Poorly structured debt in terms of maturity,
-meet any other sovereign debt currency, or interest rate composition and
management goals the large and unfunded contingent liabilities
government may have set have been important factors in inducing or
propagating economic crises in many
countries throughout history.

13. SYSTEM FOR PUBLIC DEBT MANAGEMENT (CONT’D)
What is Public Debt Management and Why is it Important?
Several debt market crises
Sound debt structures help have highlighted the importance
governments reduce their exposure to of sound debt management
interest rate, currency and other risks. practices and the need for an
efficient and sound capital
market.
Risky debt structures are often the consequence of
inappropriate economic policies--fiscal, monetary and
exchange rate--but the feedback effects undoubtedly go in
both directions.

14. Borrowing Program*
2010 Actual 2012 Revised Program
2011 Actual
Net Domestic Net Foreign Net Domestic Net Foreign
Net Domestic
Net Foreign
66% 65%
75%
35%
34%
25%
* The percentages indicated in the pie charts
refer to the gross financing mix.

15. National Government Outstanding Debt
This borrowing program also
considers payments of
outstanding obligations
amounting to P380.0 52.4% GDP 50.9% GDP 50.2% GDP
billion, consisting of P316.4
billion for domestic debts as
well as P63.6 billion for the
amortization of foreign debts.
P4,718.2B
P5,053.4B
Total borrowings for 2012 will
P5,523.3B
be P 108.9 billion more than
2011.
The 2012 end-year stock debt
of the National Government is
estimated to reach P5.461
trillion, or 50.5 percent of GDP
based on 2000
2010 2011 2012
prices, contracting from the
2011 programmed ratio of
50.9 percent.

16. To improve its debt profile, among the key strategies being
undertaken by the Aquino Government are to:
Reduce foreign debt to Extend the maturities of Re-dominate external
reduce the country’s the current debt in debt through
vulnerability to foreign order to minimize issuance of peso-
market fluctuations; refinancing or roll-over dominated bonds in
risks; the international
market to reduce and
diversify risks.

17. References:
• http://www.treasury.gov.ph
• http://dirp3.pids.gov.ph
• http://www.slideshare.net/KarenAlanSamonte

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