Outstanding government IOUs rise slightly

MANILA, Philippines - The national government issued more Treasury securities as of the end of October from a year ago as a narrow budget deficit did not stop it from borrowing funds, data from the Bureau of the Treasury showed. From January to October, outstanding government securities totaled P3.931 trillion, up 3.35 percent from last year’s P3.803 trillion.

Securities could either be Treasury bills or bonds offered by the government to investors who, in turn, lend their money at a particular interest.

The government borrows money from the domestic and foreign markets to finance its budget deficit or pay existing debts.

The amount of issued T-bonds and T-bills increased even as the deficit remained contained as of October at P52.6 billion, accounting for only 21 percent of this year’s cap of P283.7 billion.

A deficit indicates expenditures outstripped revenues, making it necessary for the government to borrow.

Broken down, bulk of the amount were cornered by the regular issuances every two weeks. T-bonds and T-bills are issued alternately every two weeks.

These issuances inched up 0.78 percent year-on-year to P2.033 trillion composed of P1.752 trillion in T-bonds and P281.15 billion in shorter-termed T-bills.

Meanwhile, special issues outside the regular program contributed P1.865 trillion, up by a faster 7.26 percent from last year’s P1.738 trillion.

Special issues are composed of retail Treasury bonds (P753.20 billion), onshore dollar bonds (P23.45 billion) and benchmark bonds (P1.031 trillion).

National Treasurer Roberto Tan, in a text message, said it is unlikely to conduct any more special issue this year, usually floated offshore, since that would already be outside the program.

According to the 2015 budget, P95.7 billion of borrowings will be sourced abroad. When converted into dollars, the amount is pegged at $2.15 billion, of which $2 billion was issued on a bond swap last January.

“We already fully used that. The remainder of the $2 billion were in the form of new bonds issued in exchange for the then existing bonds tendered for the exchange,” Tan said.

In an earlier interview, Emilio Neri Jr., lead economist at the Bank of the Philippine Islands, said there could be more borrowing as the year-end approaches to pay maturing debts early in 2016.

“There could be catch-up borrowings in the coming months to finance the upcoming obligations or upcoming payments of the National Government,” Neri has said.

“That could build up quite fast,” he added.