Government borrowings down 61% in May

MANILA, Philippines — The government brought down its borrowings in May by more than 61 percent to P112 billion on double-digit declines from both domestic and external sources.

Based on records from the Bureau of the Treasury, the government cut its gross borrowings in May to P112.18 billion, from P289.81 billion during the same month last year.

Broken down, borrowings from domestic sources fell by nearly 39 percent to P104.4 billion, from P170.51 billion, while external borrowings slumped by more than 93 percent to P7.78 billion, from P119.3 billion.

On the local end, the government borrowed P95 billion from fixed-rate Treasury bonds, similar to the amount secured in May 2020. However, lending through Treasury bills declined by almost 88 percent to P9.4 billion from P75.51 billion.

On the foreign side, project loans availed by the government soared to P7.78 billion from just P572 million. On the other hand, the Philippines did not issue global bonds in May compared to the P118.73 billion obtained during the same month last year.

In spite of the drop in May take-up, the country’s gross borrowings grew by about 17 percent in five months to P1.76 trillion from P1.5 trillion due to a surge in domestic lending from issuances by the Bangko Sentral ng Pilipinas (BSP) and Retail Treasury Bonds (RTBs).

In the January to May period, domestic borrowings accounted for more than 85 percent at P1.76 trillion, while external credit made up 15 percent at P253.03 billion.

Short term borrowings from the BSP in January comprised over a third of the domestic amount at P540 billion, while RTBs and Premyo bonds issued in March took up about 31 percent at P463.32 billion.

The government looks to obtain as much funding as it can to recover from the economic impact of the pandemic. This year it aims to achieve herd immunity by vaccinating at least 70 percent of the population by December.

The government plans to widen its borrowing program to P3.02 trillion for 2021 from P3 trillion in 2020 to finance its response measures in containing the virus. Bulk of the borrowings will be secured from domestic sources at P2.58 trillion, while another P442.36 billion will be taken from foreign financiers.

Further, bonds and other inflows will account for nearly 65 percent or P286 billion of the foreign debt, while program and project loans will make up the remainder or P156.35 billion.

As such, the government expects debt-to-GDP ratio to balloon to 57.8 percent this year, then to 58.5 percent next year, as the country swells its credit to fund efforts to rebound from the health crisis.