Government borrowings surge in 6 months

MANILA, Philippines — The national government’s borrowings surged by more than 82 percent to P840.84 billion in the first six months from P460.82 billion a year ago due to the higher volume of domestic and external securities issued during the period, according to the Bureau of the Treasury (BTr).

The figure acounted for about 70 percent of the government’s P1.19 trillion borrowing program for the whole of 2019.

For June alone, government borrowings dropped by 66.43 percent to P53.71 billion compared to P159.98 billion in the same period last year due to higher base effect brought about by the issuance of retail Treasury bonds (RTBs) in June 2018.

The government borrows from both local and foreign creditors to plug its fiscal deficit, which is currently capped at 3.2 percent of 2019 gross domestic product (GDP).

Based on Treasury data, the bulk or P615.36 billion of the total borrowings as of end-June came from domestic sources. This is two times higher than the P305.04 billion borrowed from local lenders in the same period last year.

About P235.83 billion of the domestic debt was raised through the issuance of five-year retail Treasury bonds in March, which were priced at a coupon rate of 6.25 percent.

Fixed rate treasury bonds accounted for P221.5 billion of the total domestic debt, while treasury bills contributed P158.03 billion.

Meanwhile, the BTr said foreign borrowings in the first semester increased by 44.74 percent to P225.48 billion from P155.79 billion in the same period in 2018.

Of the amount, P78.04 billion was raised from the issuance of 10-year dollar-denominated global bonds last January. The debt papers carried an all-in yield of 3.75 percent, 110 basis points higher than the US Treasury rates.

Another P43.49 billion of the total external borrowings was sourced through the offering of eight-year euro-denominated securities in May, which were priced at a coupon rate of 0.875 percent, 70 basis points over benchmark.

The three-year panda bonds, which were floated a week after the euro bonds, also contributed P18.86 billion to the total foreign debt. The securities fetched a coupon rate of 3.58 percent, translating to a tight spread which is 32 basis points above the benchmark.

Multilateral agencies, such as the World Bank, Asian Development Bank and Japan International Cooperation Agency, also extended program loans and projects loans to the Philippines amounting to P64.69 billion and P20.39 billion, respectively.

In 2018, the national government borrowed P947.55 billion from both domestic and foreign lenders, up 5.09 percent from P901.67 billion in 2017.

For 2019, the national government is expected to borrow P1.19 trillion, 20 percent higher than the 2018 program of P986 billion, in expectation of the higher fiscal deficit ceiling this year.

Of the total borrowings this year, P297.2 billion is projected to come from foreign lenders, while the remaining P891.7 billion would be sourced from domestic creditors.