Gov’t hikes borrowings to over P1 trillion in 2019

MANILA, Philippines — The national government plans to increase next year its borrowings to P1.19 trillion to finance possible higher fiscal deficit, according to the Bureau of the Treasury (BTr).

National Treasurer Rosalia de Leon said the government is planning to borrow P1.19 trillion next year, 20 percent higher than this year’s borrowing program of P986 billion.

This is the first time the government’s borrowings will exceed the trillion mark.

“It will become P1.19 trillion because the deficit will be higher at P624.73 billion next year. Then we have some maturities also,” De Leon said.

The national government borrows from local and foreign creditors to pay maturing debt and plug its budget deficit.

For next year, the Development Budget Coordination Committee (DBCC) raised its fiscal deficit target to P624.73 billion, equivalent to 3.2 percent of the country’s gross domestic product.

Finance Secretary Carlos Dominguez earlier said the decision to widen the fiscal deficit target for next year was due to higher spending requirements.

According to the BTr, 75 percent or P891.7 billion of the total borrowings next year are expected to come from domestic lenders. This was nearly 40 percent higher than the 2018 domestic borrowing program of P640 billion.

Onshore borrowings usually come in the form Treasury bills, Treasury bonds, and possibly retail Treasury bonds for smaller investors.

On the other hand, the remaining P297.2 billion ($5.504 billion) of the total amount to be borrowed next year will be sourced from external creditors. The amount was 14.1 percent lower than the 2018 level of P346 billion.

The DBCC has raised the share of foreign borrowings to 35 percent of the total borrowing program for this year. For next year, the ratio will be reduced back to 25 percent.

A part of the government’s offshore obligations come in the form of program and project loans from multilateral institutions, such as the World Bank, Asian Development Bank and the Japan International Cooperation Agency.

For next year, De Leon said the government is eyeing to enter the euro bond market, and is looking to tap once again the panda bond market.

“We’ll also have to see about the euro market,” De Leon said when asked what other markets the BTr is considering to tap next year.

“We might be again tapping the panda market but we have to go all over again the same process. But this might take a shorter time,“ she said.