Philippines: Government borrows 56% more in 7 months

MANILA, Philippines — The national government borrowed P519.97 billion from both domestic and foreign lenders in the first seven months, a sharp 55.7 percent from P334.03 billion in the same period last year, data from the Bureau of the Treasury (BTr) showed.

For July, however, the government’s gross borrowings declined 52.4 percent to P14.21 billion from the P29.84 billion a year ago.

The government borrows from local and foreign creditors to pay maturing debt and finance its budget deficit, which is targeted at three percent of the country’s GDP.

Of the amount borrowed in the first seven months, P379.58 billion came from domestic lenders, while the remaining P140.39 billion was borrowed from foreign sources.

The government’s domestic borrowings surged 89.25 percent from the P198.57 billion recorded in the same period in 2016.

About P181.85 billion of this amount came in the form of retail Treasury bonds, which were issued by the BTr last April to the general investing public.

The bonds, which were sold at a coupon rate of 4.25 percent, were aimed to support the administration’s massive infrastructure spending agenda.

Another P169.82 billion was borrowed through the sale of fixed-rate Treasury bonds, while P27.91 billion was raised through Treasury-bills.

Meanwhile, foreign borrowings from January to July also rose 36.39 percent to P140.39 billion from P135.46 billion in the same period in 2016.

The bulk of this amount, or P99.57 billion was borrowed through sale of global bonds, which was undertaken by the BTr last February.

Under this fund-raising activity, the government generated $500 million from the issuance of fresh 25-year global bonds at a rate of 3.7 percent. Another $1.5 billion in debt was swapped.

The remaining borrowings during the seven-month period also came in the form of program and project loans, which amounted to P18.01 billion and P22.81 billion, respectively. These came from multilateral agencies, including the World Bank, Asian Development Bank, and the Japan International Cooperation Agency, among others.

Earlier, the Development Budget Coordination Committee revised its borrowing ceiling in 2017 to P727.64 billion from the original P631.3 billion.

For 2018, the national government is programmed to borrow P889.51 billion. Of this amount, P176.26 billion will come from foreign financing, while the remaining P711.8 billion will be borrowed domestically.