Government borrowings balloon to P2.5 trillion

MANILA, Philippines — Government borrowings ballooned to nearly P2.5 trillion following a record-high retail Treasury bond (RTB) sale last month, according to the Bureau of the Treasury (BTr).

Based on the latest cash operations report of the Treasury, the government’s gross borrowings   reached   P2.47 trillion from January to August, nearly 170 percent higher than the P916.27 billion recorded in the same period last year.

The latest figure is already equivalent to more than 80 percent of the country’s P3 trillion borrowing program for the whole of 2020.

For August alone, government debt surged by 700  percent to P612.91 billion from P76.52 billion last year due  to the recent issuance of five-year RTBs in the domestic market.

Through this RTB sale, the government was able to raise P516.3 billion, the highest amount recorded in any of its retail issuances.

According to the BTr, proceeds of the RTB issuance would be used to aid the country’s efforts to mitigate the impact of the pandemic and to support sectors most affected by the health crisis.

The proceeds will also be used to fund infrastructure projects and other national government expenditures, as well as  augment the P310.8 billion issued by the government in another RTB offering in February.

Including the proceeds from the  RTB sale, the country’s total domestic borrowings from January to August reached P1.96 trillion, a sharp 206  percent increase from the  last year’s  P640.73 billion.

The remaining amount came from fixed rate Treasury bonds (P447.86 billion), Treasury bills (P385.3 billion), and short-term borrowings from the Bangko Sentral ng Pilipinas (P300 billion).

Meanwhile, the national government’s gross external borrowings in the first eight months   rose by 85 percent to P509.69 billion from last year’s   P275.55 billion.

More than half or P306.54-billion of the amount was raised from program loans extended by multilateral institutions. Project loans also amounted to P17.09 billion.

The BTr said some P67.33 billion of the total foreign debt was also raised from the euro-denominated bond sale conducted by the Philippines back in February, while P118.74 billion came from the global bond sale in May.

The Philippines is ramping up its borrowings to plug the deficit in its budget, which is expected to widen to P1.82 trillion or 9.6 percent of gross domestic product (GDP) due to weak revenue generation and increased spending requirements.

As the government continued to increase its borrowings to fund coronavirus response efforts, the country’s outstanding debt reached a new record-high of P9.16 trillion by the end of July 2020.

Budget documents showed that the debt pile is expected to hit P10.16 trill9on by December.