Philippines: Government slashes borrowings by 45% to P1.07 trillion in H1

MANILA, Philippines — The government slashed its borrowings in the first semester to just a little over P1 trillion as the economy continues to recover from the pandemic.

Latest data from the Bureau of the Treasury showed total borrowings from January to June dipped by 45 percent to P1.07 trillion from P1.93 trillion in 2021.

Local borrowings declined by 55 percent to P741.26 billion as against the P1.65 trillion in the same period last year.

However, external financing went up by 16 percent to P329.34 billion from P294.95 billion in the six-month period in 2021.

In June alone, borrowings slipped by 14 percent to P146.17 billion from P167.2 billion in 2021.

These developed as domestic borrowings dropped almost 30 percent to P96.35 billion, while offshore financing jumped by 56 percent to P49.72 billion.

Broken down, fixed-rate Treasury bonds accounted for over 70 percent at P535.38 billion of the domestic borrowings. The government also issued P457.8 billion worth of Retail T-bonds.

At the same time, it recorded a net redemption of P251.92 billion for Treasury bills (T-bills). The government has no more short-term obligations to the central bank as it managed to pay P300 billion in provisional advances in May.

Under the law, the Bangko Sentral ng Pilipinas can give provisional advances to the government, with or without interest, to finance expenditures listed in the yearly program.

On the other hand, program loans made up 43 percent at P136.61 billion of the foreign borrowings in the first semester.

Multi-tranche global bonds worth P117.33 billion in March and samurai bonds totaling P28.55 billion in April were also borrowed from external sources.

The government also sought another P46.85 billion in project loans from multilateral institutions.

As of the first half, the government has used up about 43 percent of its borrowing plan it crafted for this year.

This year, the government plans to borrow P2.47 trillion, of which P1.91 trillion will come from domestic sources and the remaining P560.58 billion  from external sources.

This is four percent lower than the P2.58 trillion total borrowings for the whole of 2021.

In turn, debt-to-gross domestic product ratio is expected to decline to 61.8 percent this year from the current 17-year high of 63.5 percent.