Gov’t borrowings down 15.7%

MANILA, Philippines - Borrowings by the government fell 15.7 percent in the first seven months of the year largely due to prudent financial management which allowed the Aquino administration to generate additional revenues and fund its expenditures.

Documents from the Department of Finance showed that the government borrowed P229.24 billion from January to July, lower than the P272.03- million debt secured in the same period last year.

Of the total borrowings, P142.53 billion was sourced locally, mainly through the sale of Treasury bonds. The amount marked a more than four-fold jump from the P33.8 billion recorded a year ago.

The government has adopted the policy of relying more on local sources as part of its debt-liability management program. This strategy is also in line with efforts to prevent exposure to substantial foreign-exchange risk.

Foreign borrowings, done largely by tapping loans from development lending institutions, accounted for P86.71 billion or more than five times the P16.5 billion borrowed the previous year.

All foreign borrowings are in the form of official development assistance (ODA) from international development institutions, led by the Asian Development Bank, the World Bank and the Japan International Cooperation Agency. Loans from these agencies carry much lower interest rates compared with commercial loans.

In July alone, government borrowings amounted to P55.03 billion,slightly higher than the P50.3 billion registered in the same month a year earlier. Foreign borrowings accounted for P29.62 billion, 79.5 percent more than the previous year’s level.

The remaining P25.4 billion came from local lenders. This represented a decline of 24.85 percent year on year.

Over the years, the Philippines has trimmed its debt to a more manageable level allowing it to invest more in social services and other initiatives meant to sustain economic growth.

The Philippines has been one of the fastest growing economies in Asia, expanding by 6.8 percent in 2012 and 7.2 percent last year. Despite this, the country still has one of the highest poverty rates in the region at 25.2 percent as of 2012.