Philippines: Government borrowings down; further cuts likely

MANILA, Philippines — The government slashed its borrowings by nearly 10 percent to P980 billion in the first quarter, particularly on its obligations to the domestic market, and a further reduction is likely as the country’s budget deficit eases, the Bureau of the Treasury said.

BTr data showed total borrowings in March dropped by almost 60 percent to P237.6 billion from P589.89 billion in obligations in the same period last year.

Borrowings from local lenders plummeted by 68 percent to P146.05 billion while external debt also slipped by 30 percent to P91.56 billion.

This brought the first quarter borrowings to P979.76 billion, 9.46 percent less than the P1.08 trillion in the January to March 2022 period.

For the three-month period this year, domestic borrowings went down by 19 percent to P684.66 billion while offshore financing rose by 27 percent to P295.1 billion.

In a briefing, national treasurer Rosalia de Leon said the government could cut down on its borrowings after fresh new debt breached the P1-trillion mark in just nine months of the Marcos administration.

“Going forward, we see this declining because we also have redemptions and we have bonds that will mature,” De Leon said.

“At the same time, we are seeing that the deficit will continue to go down, so we will be borrowing less to finance the gap,” she said.

The country’s debt stock stood at a record P13.86 trillion as of end-March while its share to the overall economy settled at 61 percent, still above the international threshold.

The budget deficit, however, eased to P270.9 billion as of end-March with its share to the gross domestic product (GDP) softening to 4.8 percent and closing in to the pre-COVID level.

“We have to look at not just the volume of the debt that we are borrowing, but also in terms of its percent to the GDP,” De Leon said.

“The productivity of the economy is growing because of all the resources that we are plotting to finance our expenditures,” she said.

Still, De Leon emphasized that there is a need to calibrate the borrowings in terms of spending and government collections.

She said the Bureau of Internal Revenue and the Bureau of Customs should be able to continue their strong performance in order to reduce the deficit.

This would allow the government to stick to or even reduce its borrowing program crafted for 2023.

To manage borrowing, De Leon noted that the government already reduced its offering for Treasury bonds to P25 billion from the usual P35 billion every auction.

Similarly, the BTr also delayed the its first retail dollar bond issuance originally targeted to be offered last month. RDBs are part of the government’s program to make government securities available to retail investors, especially individuals.

“We are oozing with cash, we are fully awarding our T-bonds. So we also have to calibrate in terms of our borrowing,” De Leon said.

“Plus we have to look at the market conditions. We are looking for a more favorable exchange rate so investors will have an upside by the time the bonds will mature,” she said.

The government has been aiming to raise $2 billion for its first RDB.

Asked when the government plans to issue the RDB, De Leon said it remains a moving target, but an offering by the third quarter is being eyed.