Philippines: BSP-approved foreign borrowings up 19% in Q1

MANILA, Philippines — Foreign borrowings approved by the Bangko Sentral ng Pilipinas (BSP) continued to climb, rising by 19 percent to $2.84 billion in the first quarter from $2.38 billion in the same period last year due to COVID-related spending.

Almost a third or $900 million of the total foreign borrowings went to the government’s COVID-19 response measures, particularly the procurement and distribution of vaccines, according to the BSP.

Another 28 percent or $798 million was set aside to refinance the government’s existing obligations and general financing requirements, while 21 percent or $600 million was allocated for disaster resilience programs.

Likewise, $300 million was set aside for social protection, $138 million for public transport improvement and $105 million for maritime safety.

The BSP said around half of the amount or $1.44 billion was in the form of project loans, while $600 million was in the form of program loans.

The BSP also approved the national government’s two bond issuances worth $798 million.

All foreign loans to be contracted or guaranteed by the government needs prior BSP approval under Section 20, Article VII of the 1987 Constitution.

Likewise, all foreign borrowing proposals by the national government, government agencies and government financial institutions have to be submitted for approval-in-principle by the Monetary Board before commencement of actual negotiations as mandated by the Letter of Instructions 158 issued in January 1974.

“The BSP promotes the judicious use of the resources and ensures that external debt requirements are at manageable levels, to assure external debt sustainability,” the BSP said.

Due to the economic slowdown, which resulted in lower revenue take and higher spending for COVID-19 response measures, foreign borrowings by the national government soared by 82.5 percent to $17.7 billion last year from $9.7 billion in 2019.

Bond issuance by the national government surged by nearly 89 percent to $6.6 billion from $3.5 billion, while program loans amounted to $7.5 billion or 5.3 times the previous level of $1.4 billion.

Last year’s foreign borrowings also consisted of 15 program loans worth $3.7 billion.