Government borrowings ease in 6 months

MANILA, Philippines — The national government borrowed P460.86 billion from both domestic and external lenders in the first half of the year, according to the Bureau of the Treasury (BTr).

Based on the latest cash operations report of the BTr, this was 8.8 percent lower than the P505.76 billion borrowed in the same period in 2017.

The government borrows from local and foreign creditors to pay maturing debt and finance its budget deficit, which is targeted at three percent of gross domestic product (GDP).

Of the total borrowings in the first semester, the BTr said bulk or P305.4 billion came from domestic sources while the remaining P155.82 billion was borrowed from foreign lenders.

Domestic borrowings, for its part, dropped 16.78 percent from the P366.51 billion posted in the same period in 2017.

About P121.77 billion of the total domestic financing came in the form of Retail Treasury Bonds (RTBs). Another P116.69 billion was raised through the issuance of fixed rate Treasury bonds, while the remaining P66.58 billion was accounted for by Treasury bills.

Meanwhile, external borrowings as of end-June rose 11.93 percent to P155.82 billion as compared to P139.21 billion a year ago.

Bulk or P102.68 billion of this amount came from the issuance of global bonds, while P12.01 billion was raised through the sale of panda or renminbi-denominated bonds.

Last January, the Philippine government successfully sold $2 billion worth of 10-year global bonds at a coupon rate of 3.3 percent. About 1.46 billion renminbi ($230 million) in new money was also raised from the sale of three year panda bonds at a coupon rate of five percent.

Other sources of external debt include program loans (P21.44 billion) and project loans (P19.68 billion) from multilateral agencies, such as the World Bank, Asian Development Bank and Japan International Cooperation Agency.

For 2018, the national government is programmed to borrow P986 billion from local and foreign lenders. This is projected to rise 20 percent to P1.19 trillion next year in expectation of a higher fiscal deficit.

To recall, the Development Budget Coordination Committee raised the government’s fiscal deficit ceiling in 2019 to P624.73 billion, equivalent to 3.2 percent of GDP.