Government borrowings soar 233% to P3.22 trillion from January to October

MANILA, Philippines — The country’s gross borrowings breached the P3-trillion mark from January to October as the government continued to secure more loans to fund its COVID-19 response, according to the Bureau of the Treasury (BTr).

The national government’s gross borrowings soared by 233 percent to P3.22 trillion in the first 10 months from P967.56 billion in the same period last year.

According to the BTr, P2.65 billion of the total amount came from domestic lenders, while the remaining P574.44 billion was sourced from external creditors.

The government’s gross domestic borrowings was comprised of P420.31 billion in Treasury bills, P561.91 billion in Treasury bonds, P827.11 billion in Retail Treasury Bonds (RTBs), and P840 billion in short-term loans from the Bangko Sentral ng Pilipinas (BSP).

Foreign debt, meanwhile, included P364.64 billion in program loans and P23.73 billion in project loans from bilateral and multilateral partners.  Foreign debt also covered the P67.33 billion funds raised from the euro bond issuance in February and the P118.74 billion raised from the issuance of global bonds in May.

While gross borrowings already hit P3.22 trillion as of end-October, National Treasurer Rosalia de Leon said that the government has not yet exceeded its P3 trillion borrowing program for this year.

“That figure (P3.22 trillion) included the BSP advances, which we paid and proceeds from the switch program,” she said.

De Leon said these amounts have already been “rolled over,” and hence, should be excluded from the computation in comparison with the program.

De Leon was referring to the P300 billion short-term loan borrowed by the BTr from the central bank in March and paid in September. The following month, the Treasury secured another P540 billion in advances from the BSP.

“Otherwise, it will be like we borrowed P300 billion plus P540 billion, right? It is like the 90-day T-bills, since it is being rolled over,” the national treasurer said.

Meanwhile, the Treasury also offered a switch tender option for investors during its RTB issuances in February and August. Debt swaps allow investors to exchange old debt notes with newer securities. In total, P88.6 billion of  the P827.11 billion   raised this year from RTBs came from switch tenders.

The Philippines is ramping up its borrowings to plug the deficit in the budget, which is expected to reach 9.6 percent of   gross domestic product (GDP) this year amid weak revenue generation and higher spending requirements.

By the end of the year, the Philippines’ outstanding debt is seen to hit P10.16 trillion, before further increasing to P11.98 trillion in 2021. These would translate to a debt-to-gross domestic product level of 53.9 percent for 2020 and 58.1 percent for 2021.