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Philippines: Foreign borrowings down 30% in Q1
MANILA, Philippines — Foreign borrowings of the national government amounted to $2.38 billion in the first quarter, 30 percent lower than the $3.42 billion recorded in the same period last year, according to the Bangko Sentral ng Pilipinas (BSP).
The Philippines raised 1.2 billion euros via the issuance of three- and nine-year global bonds in January, the country’s first and only transaction in the international capital market during the first quarter.
The BSP said the Monetary Board also approved four project loans worth $493 million and two program loans amounting to $800 million from January to March.
According to the BSP, proceeds of the fund raising activity in the offshore debt market in the first quarter would be used for the national government’s general financing requirements.
Likewise, the amount would be used to fund projects to support infrastructure development and transport connectivity, and the implementation of Philippine Competition Act as well as programs to develop youth employment opportunities and resilience to natural disasters.
The BSP said nearly $220 million of the total amount borrowed from foreign lenders would fund an infrastructure flagship project under the Build Build Build program, particularly the undertakings of the project management consultancy of the Philippine National Railways (PNR) south long haul project.
All foreign loans to be contracted or guaranteed by the government are required to obtain prior approval from the BSP as mandated under Section 20, Article VII of the 1987 Philippine Constitution.
Likewise, Letters of Instructions No. 158 issued in January 1974 also requires that all foreign borrowing proposals by the national government, government agencies and government financial institutions are required to be submitted for approval-in-principle by the Monetary Board before commencement of actual negotiations.
“The BSP promotes the judicious use of the resources and ensures that external debt requirements are at manageable levels, to ensure external debt sustainability,” the BSP said.
Last year, foreign borrowings by the national government as well as state-run corporations jumped by 32 percent to $9.7 billion from $7.4 billion in 2018.
The national government accounted for 88.6 percent or $8.6 billion of the total public sector borrowings, while government-owned and controlled corporations (GOCCs) cornered the remaining 11.4 percent or $1.1 billion.
National government borrowings consisted of four bond issuances amounting to $3.5 billion, seven project loans worth $3.7 billion, and four program loans worth $1.4 billion.
Finance Secretary Carlos Dominguez said earlier the country’s budget shortfall could balloon to 5.3 percent of GDP this year as the government is likely to spend more in order to save Filipinos from the COVID-19 pandemic after Malacañang extended the enhanced community quarantine in Luzon until April 30.
The Philippines borrows heavily from foreign and domestic lenders to finance the budget deficit as it continues to spend more than the revenues it collects.
Source: https://www.philstar.com/business/2020/04/21/2008558/foreign-borrowings-down-30-q1