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Philippines: Government borrowings decline by 16% in 2022
MANILA, Philippines — The government brought down its borrowings by 16 percent last year as the economy continued to recover from the pandemic, with its financing program hitting just 98 percent.
Latest data from the Bureau of the Treasury showed total borrowings in 2022 went down to P2.16 trillion from the P2.58 trillion in obligations in 2021.
By end-2022, the government used up 97.8 percent of the borrowing plan it crafted for the year, which means that it managed to finance programs without relying much on borrowings.
The government planned to borrow P2.21 trillion, of which P1.65 trillion would come from domestic sources while the remaining P561.5 billion would be from external sources.
It should be noted that interest rates were on a continued rise last year as inflation became a problem, both on the global and domestic front, prompting central banks worldwide to be more aggressive in interest rate adjustments.
This made borrowing more costly for the Philippines last year. While rates are lower now, yields remain elevated especially as inflation is not expected to return within the target band until the fourth quarter.
For 2023, the borrowing program is still at P2.21 trillion. But this will be slightly higher at two percent than last year’s P2.16 trillion total borrowings.
Meanwhile, bulk of the total borrowings last year at 76 percent, worth P1.64 trillion, were from local lenders. This is an 18 percent drop from the P2.01 trillion in 2021.
Broken down, P1.19 trillion was secured through fixed-rate Treasury bonds.
Another P834.48 billion was borrowed via Retail Treasury Bonds following the issuance in March and September last year.
At the same time, the government recorded a net redemption of P385.78 billion for T-bills.
On the other hand, the remaining 24 percent or P520.09 billion were borrowed from foreign sources. External debts also declined by 8.5 percent from P568.67 billion.
Majority or 45 percent of the entire external financing at P234.26 billion was from the issuance of global bonds in March and October.
Some P136.6 billion was sourced from multilateral institutions via program loans and another P120.68 billion was made up of project loans.
The remaining P28.55 billion was borrowed via samurai bonds in April last year.
Finance chief Benjamin Diokno earlier said the government would focus its borrowings from the domestic market as part of its prudent debt management strategy of lowering foreign exchange risks, as well as initiatives to further develop the domestic capital markets.
The government’s heavy reliance on domestic financing has also led to the redenomination of the country’s debt, allowing debt servicing to be less vulnerable to foreign exchange volatilities.
Source: https://www.philstar.com/business/2023/03/13/2251141/government-borrowings-decline-16-2022