National government (NG) debt rose to P6.65 trillion last year, the government reported on Monday, expanding by nearly P600 billion from 2016 due to factors such as pre-funding for this year’s spending requirements.

The end-2017 level was up by 9.25 percent or P562.17 billion compared to the prior year, the Bureau of the Treasury said, with P215.06 billion added in December alone.

It was equivalent to 42.1 percent of gross domestic product (GDP), which the Treasury stressed was unchanged from 2016. The result, however, was higher than the 40.7 percent target presented during a Development Budget Coordination Council (DBCC) meeting last June.

“The difference compared to the program is due to the lower than DBCC target nominal GDP and the successful issuance of RTB (retail treasury bond) in December to pre-fund some of the 2018 financing requirement,” the BTr said.

Strong public demand allowed the government to raise P255.4 billion — more than eight times the amount initially considered — from the yearend RTB offering.

University of Asia and the Pacific economist Victor Abola agreed: “If it (the government) only raised the normal P60 billion in December, the debt ratio would have dropped to 40.9 percent.”

Looking ahead, Abola said the pre-funding would mute government borrowings this year, especially considering that official development assistance would be used to fund some of the Duterte administration’s priority infrastructure projects.

Domestic borrowings accounted for the bulk or P4.44 trillion of full-year NG debt, up 5.5 percent or P233.06 billion from the end-November level due to the net issuance of government securities amounting to P233.25 billion.

The external debt of P2.21 trillion, meanwhile, was P18 billion or 0.8 percent lower from the previous month due to the peso’s appreciation against the US dollar, which reduced the peso value of NG debt by P17.18 billion, alongside net repayments of P3.40 billion.

“This was tempered by third-currency appreciation against the US dollar amounting to P2.58 billion,” the Treasury bureau added.

The peso, it noted, rose to P49.95 against the US dollar as of end-December from November’s P50.34:$1. The exchange rate a year earlier was P49.76:$1.

Year-on-year, domestic debt rose by 12.9 percent or P507.16 billion while external debt increased by 2.6 percent or P55 billion.

The latter rise was “due to [the]P25.2 billion net issuance for the year and the effect of currency adjustments (P8.2 billion for local currency depreciation and P20.9 billion for third currency depreciation),” the Treasury said.

Government-guaranteed debt, meanwhile, fell by P675 million or 0.1 percent to P478.11 billion from end-November’s P478.78 billion. It was down 6.9 percent from the P513.66 billion recorded at end of last year.

The month-on-month drop, the Treasury said, was due to the “combined effect of net repayments on external guarantees amounting to P1.41 billion and the impact of peso appreciation on the peso value of government guarantees amounting to P2.19 billion offsetting the P0.43 billion effect of third-currency appreciation against the US dollar and net inclusions of domestic guarantee obligations amounting to P2.5 billion.”

Year-on-year, NG guarantees were down by 6.9 percent or P35.55 billion.