Philippines raises $106.3 billion from taxes, borrowings

MANILA, Philippines — The Philippines has so far raised $106.3 billion (approximately P5.13 trillion) in funds this year from tax collections, other revenues and borrowings combined, the Department of Finance (DOF) said yesterday.

In a virtual press briefing organized by the Philippine embassy in Washington, Finance Secretary Carlos Dominguez said $45.3 billion of this amount came from tax collections and other local sources of revenues.

“The balance of $61 billion are from foreign and domestic borrowings. Of the $61 billion, $51 billion is domestic and only $10 billion is foreign,” Dominguez said.

The debt figure is equivalent to approximately P2.94 trillion, which is 98 percent of the government’s P3-trillion borrowing program this year.

Further broken down, Dominguez said $40 billion of the domestic debt came from commercial sources, through the issuance of government securities, while $11 billion came from the “quantitative easing” efforts of the Bangko Sentral ng Pilipinas (BSP).

“Essentially, we are relying on the domestic market,” the finance chief said.

The government is ramping up its borrowings to bridge its budget deficit, which is expected to widen to P1.82 trillion or 9.6 percent of gross domestic product (GDP) this year, due to weak revenue generation and strong spending amid the coronavirus pandemic.

In the first nine months, revenues declined by 7.92 percent to P2.14 trillion from P2.33 trillion in the same period last year. This was, however, 8.8 percent above the P1.97-trillion revised revenue target for the period.

For next year, the government is programmed to borrow another P3 trillion. Dominguez said the borrowing program for 2021 is expected to remain biased toward domestic sources as against foreign lenders.

“Next year, our financing package will again be a mix of roughly 70:30 or 75:25, depending on whether or not there are good opportunities in the foreign market. But we rely mostly on the domestic market borrowings,” he said.

Meanwhile, Dominguez’s presentation during the same event showed that the Philippines has already secured $10.1 billion in loans and grants from foreign sources as of Nov. 4 to finance its COVID-19 response efforts.  It did not specify how much has already been disbursed to the government.

Of this amount, $3.8 billion came from the Asian Development Bank (ADB), while $1.2 billion was sourced from the World Bank.

The Japan International Cooperation Agency (JICA) also provided $917.9 million in loans, followed by the Asian Infrastructure Investment Bank (AIIB) with $750 million.

Another $275.7 million came from the Agence Francaise de Developpement, and $100 million from the Export-Import Bank of Korea.

The government also secured $595 million in project loans and $26.36 million in grants to assist key agencies involved in COVID-19 response.

Meanwhile, $2.35 billion of the total COVID-19 financing was raised from the issuance of US dollar-denominated global bonds in April.