Gov’t borrowings hit P149B in Aug

MANILA, Philippines - Total borrowings of the Aquino administration nearly tripled  to P148.9 billion in August from only P53.19 billion a year ago, the Bureau of Treasury reported yesterday.

Despite the sharp increase in August, total borrowings for the first eight months declined by 12 percent to P446.28 billion from P510 million a year ago.

The decline was due to the government’s strategy of borrowing more from local sources to capitalize on the overflowing liquidity in the local financial system.

The government borrows from the domestic market through the sale of government securities. It also taps borrowings  from development institutions such as the Asian Development Bank and World Bank.

The bulk of total borrowings or P419.28 billion was sourced from the domestic market while the remaining P27 million came from foreign lenders.

In August alone, the government borrowed P147.25 billion from the local market, mainly consisting of retail treasury bonds.  Foreign borrowings, in the form of project loans,  fell to P1.65 billion from P2.06 billion.

For this year, the government plans to borrow P630.6 billion locally and P104 billion from the international market.

The  Aquino administration has been ramping up its  borrowings from local sources to take advantage of record low interest rates in the domestic financial market.

The increase in domestic borrowings is in line with the government’s goal to reduce the foreign currency component of its total debt, lengthen maturities, and pare down borrowing costs.

Latest data from the Bureau of Treasury showed that the country’s outstanding debt reached P5.451 trillion as of June, up almost seven percent from the P5.101 trillion  recorded in the same period last year.

The government’s outstanding debt is forecast to rise to P5.78 trillion by yearend, equivalent to 48 percent of the country’s gross domestic product.

President Aquino’s administration is bent on limiting the country’s deficit to P238 billion this year or two percent of GDP as it aims to achieve sustained inclusive growth.