MANILA, Philippines - The country''s debt stock rose 4.2% last year as the Arroyo government jacked up borrowings to finance its budget deficit.

Data from the Bureau of Treasury showed the Philippines' outstanding debt increased by P175.7 billion to P4.396 trillion in 2009 from P4.22 trillion in the year ago. The end-December figure, however, was 0.6% lower than end-November's P4.424 trillion.

More than half or P2.47 trillion of the total debt as of last year was owed to domestic creditors, and the balance of P1.93 trillion came from foreign lenders.

The domestic component of the government debt inched up 2.3% from a year ago, while foreign debt rose by a faster 6.6%, as the Arroyo administration tapped the global bond market 3 times last year.

The government sold $1 billion worth of dollar-denominated securities in October last year. Before that, it issued $750 million in 10-year bonds in July, and $1.5 billion in January.

Government relies heavily on its borrowings to fund the budget deficit, which hit a record P298.5 billion or 3.9% of gross domestic product (GDP) in 2009. The deficit was expected to hit P293 billion or 3.5% of GDP this year.

For 2009, the country spent a total of P622.3 billion to service its debts, up 2% from P612.7 billion in 2008.