Philippines: Government hikes borrowings for 1st time this year

MANILA, Philippines — The government increased its borrowings for the first time this year to P133 billion in August, as the Marcos administration marked its second month in office.

Latest data from the Bureau of the Treasury showed that total borrowings for August rose by 13.25 percent from the P117.74 billion in obligations in the same month last year.

Since the start of the year until July, the Treasury has been trimming its borrowings amid the continued reopening of the economy.

US and global interest rates have also been on the rise for months now which, in turn, increases the cost of borrowings.

Borrowings from local lenders jumped by 31 percent to P132.02 billion as against the P100.97 billion in August 2021.

External financing, however, plummeted by 92 percent to P1.32 billion from P16.77 billion.

Finance Secretary Benjamin Diokno earlier maintained that the bulk of government borrowings would come from domestic sources, in pursuit of prudent debt management and domestic capital market development.

Diokno said such a strategy would minimize the country’s foreign exchange risk resulting from ongoing global uncertainties.

For the eight-month period, borrowings slipped by 42 percent to P1.379 trillion from P2.388 trillion in 2021.

Domestic borrowings have dropped by 46 percent to P1.04 trillion, while offshore financing also declined by 26 percent to P337.79 billion.

Broken down, fixed-rate Treasury bonds accounted for P140 billion of the domestic borrowings in August. The government did not issue any retail T-bonds.

At the same time, it recorded a net redemption of P7.98 billion for Treasury bills (T-bills) in August.

The government has no more short-term obligations to the central bank as it managed to pay P300 billion in provisional advances in May.

On the other hand, project loans made up the entire foreign borrowings during the month at P1.32 billion.

There were no multi-tranche global bonds, samurai bonds, and program loans from multilateral institutions during the month.

As of end-August, the government had used up about 62 percent of its borrowing plan crafted for this year.

This year, the government planned to borrow P2.21 trillion, of which P1.65 trillion would come from domestic sources and the remaining P561.5 billion from external sources.

This is 13 percent lower than the P2.55 trillion total borrowings for the whole of 2021.

Diokno has emphasized that the country’s need for borrowing would decline significantly as revenues are on the rise and the economy continues to expand.