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
Profile of Domestic Public DebtDecember 2001 data indicate that Domestic Public Debt byoutstanding domestic public debt reachedP1.25 trillion, equivalent to $24.3 billion. Maturity Dec. 1995Treasury bills and bonds account for 98% ofdomestic public debt. Similar to the maturity Short-Term Medium-Term Long-Termstructure 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 ofmedium-term domestic debt rose from 26 Domestic Public Debt bypercent in 1995 to 32 percent in 2001. Long-term domestic debt sharply increased its Maturity Dec. 2001share by 14 percent from 1995 to 2001. Thishas caused the average length of treasury Short-Term Medium-Term Long-Termbonds to reach six years. Most of the 34.1%treasury bonds will mature between 2002 33.5%and 2007 with the largest bunching ofmaturities occurring in 2003. 32.3%
Profile of Foreign Public DebtAs of December 2001, foreign Foreign Public Debt by Creditorpublic debt amounted to P1.14 Dec. 1995trillion or $22.08 billion. Data Commercial Bilateral Multilateralindicate that there is a shift increditor profiles. There is a 34.1%marked preference for 23.8%commercial creditors, with theirshare increasing from 34 percentin 1995 to 48 percent in 2001. 42.1%The increased role played bylenders is attributable to the Foreign Public Debt by Creditor Dec. 2001country’s renewed access to thevoluntary debt markets. On the Commercial Bilateral Multilateralother hand, the shares of 19.6%multilateral and bilateral sources 47.6%fell during the same period. 32.8%
Profile of Foreign Public Debt(cont’d)Foreign public debt has Foreign Public Debtremained largely long- Maturity Profileterm, although thegovernment started to 3000increase its medium-term foreign 2500 (In Million USD)borrowings in 2000. 2000Most of the foreigndebt will mature in the 1500next ten years.Maturities are expected 1000to steadily decline after2010. Currently, the 500average length offoreign public debt is 0 2022 2001 2004 2007 2010 2013 2016 2019 2025 2028 2031 2034 2037 2040eleven years.
Profile of Foreign Public Debt (cont’d)In terms of currencyprofile, foreign public debt Foreign Public Debt by Currencycontinues to be dominated by Dec. 1995US dollar and Japanese yen US Dollar Japanese Yendebt, accounting for more than Euro French Franc90 percent of foreign public Deutsche Mark Other Currenciesdebt. 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 ascompared to JPY-denominateddebt. From 1995 to 2001, the Foreign Public Debt by Currencyshare of USD-denominated Dec. 2001debt in foreign public debt US Dollar Japanese Yenincreased from 51 percent to Euro French Franc58 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%
Since the Philippines fell into a debt crisis in1983, the management of public debt hasemerged as one of the persistent issueshounding the Philippine economy. Over theyears, the country strived hard to lessen thedebt burden in order to free resources fordevelopment. In fact, during the nineties,though the debt stock continued to increase,most reviews have indicated that the publicdebt was sustainable. The Philippines provedits resilience when it weathered the 1997financial crisis while other Southeast Asianeconomies suffered meltdowns arising fromdebt-related liquidity problems.
SYSTEM FOR PUBLIC DEBT MANAGEMENT What is Public Debt Management and Why is it Important? Governments should ensure that both theIt is the process of establishing level and rate of growth in their public debtand the executing a strategy for is fundamentally sustainable, and can bemanaging the government’s serviced under a wide range ofdebt in order to: circumstances while meeting cost and risk -raise the required amount of objectives.funding -achieve its risk and costobjectives Poorly structured debt in terms of maturity, -meet any other sovereign debt currency, or interest rate composition andmanagement goals the large and unfunded contingent liabilitiesgovernment may have set have been important factors in inducing or propagating economic crises in many countries throughout history.
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.
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 chartsrefer to the gross financing mix.
National Government Outstanding DebtThis borrowing program alsoconsiders payments ofoutstanding obligationsamounting to P380.0 52.4% GDP 50.9% GDP 50.2% GDPbillion, consisting of P316.4billion for domestic debts aswell as P63.6 billion for theamortization of foreign debts. P4,718.2B P5,053.4BTotal borrowings for 2012 will P5,523.3Bbe P 108.9 billion more than2011.The 2012 end-year stock debtof the National Government isestimated to reach P5.461trillion, or 50.5 percent of GDPbased on 2000 2010 2011 2012prices, contracting from the2011 programmed ratio of50.9 percent.
To improve its debt profile, among the key strategies beingundertaken by the Aquino Government are to:Reduce foreign debt to Extend the maturities of Re-dominate externalreduce the country’s the current debt in debt throughvulnerability 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.