Government foreign borrowings surge to $13 billion  in 9 months
All foreign loans to be contracted or guaranteed by the government needs prior approval from the Monetary Board of the Bangko Sentral ng Pilipinas (BSP) under the 1987 Constitution.
STAR/ File
Government foreign borrowings surge to $13 billion in 9 months
Lawrence Agcaoili (The Philippine Star) - October 24, 2020 - 12:00am

MANILA, Philippines  — Foreign borrowings by the national government surged by 44.2 percent to $13.14 billion in the nine months to September as the country turned to the offshore debt market for more funds to bankroll key infrastructure projects and to control the COVID-19 pandemic.

All foreign loans to be contracted or guaranteed by the government needs prior approval from the  Monetary Board of the Bangko Sentral ng Pilipinas (BSP) under the 1987 Constitution.

The Monetary Board allows the national government to borrow more from foreign creditors to finance infrastructure projects and fund measures to fight the impact of the coronavirus disease.

“The BSP promotes the judicious use of the resources and ensures that external debt requirements are at manageable levels, to assure external debt sustainability,” the central bank said in a statement.

Foreign borrowings include the $2.35 billion raised via the issuance of global bonds in late April to be used for the government’s financing requirements as it continues to incur wider budget deficit amid falling revenues arising from the pandemic.

During the nine-month period, program loans reached $6.89 billion while project loans amounted to $2.81 billion.

In the third quarter, foreign borrowings surged by 47.7 percent to $3.92 billion from $2.65 billion in the same quarter last year

The approved borrowings during the period include five project loans worth $1.98 billion and six program loans worth $1.94 billion.

Around 37.2 percent or $1.46 billion will be used to fund key infrastructure development, while 31.8 percent will augment the government’s war chest to finance programs to alleviate the suffering of the Filipinos and cushion the impact of the COVID-19 pandemic.

Another $417.42 million will be used for financial inclusion programs and another $26.53 million for local governance reforms.

Latest data from the central bank showed the country’s external debt rose by 7.6 percent to $87.45 billion in the first semester from $81.26 billion in the same period last year.

Public sector external debt reached $51 billion and accounted for more than half or 58.3 percent of the country’s foreign debt. The national government accounted for 87 percent or $44.4 billion of the total, while government-owned and controlled corporations, government financial institutions and the central bank cornered the remaining 13 percent or $6.6 billion.

On the other hand, the external debt of private companies amounted to $36.5 billion for a share of 41.7 percent.

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