BSP–approved foreign borrowings up 19% to P4.7 billion in Q3

MANILA, Philippines — Bangko Sentral ng Pilipinas (BSP)-approved foreign borrowings  increased by nearly 19 percent to $4.66 billion in the third quarter from $3.92 billion in the same period last year as the country continues to gradually recover from the impact of the pandemic.

The BSP approved the $3 billion bond issuance of the government to bankroll its financing requirements, as well as three project loans worth $855.94 million and two program loans amounting to $800 million from July to September.

All foreign loans to be contracted or guaranteed by the government need prior BSP approval under Section 20, Article VII of the 1987 Constitution.

Likewise, all foreign borrowing proposals by the national government, government agencies and government financial institutions have to be submitted for approval-in-principle by the Monetary Board before the commencement of actual negotiations, as mandated under Letter of Instruction 158 issued in January 1974.

From January to September, public sector foreign borrowings approved by the  Monetary Board dropped by 21.6 percent to $10.3 billion from $13.14 billion in the same period last year.

The BSP-approved government foreign borrowings during the nine-month period consisted of $6.3 billion in bond issuance, $2.4 billion in project loans and $1.4 billion in program loans.

The national government borrows heavily from foreign and domestic creditors to finance the country’s budget deficit as the government spends more than what it actually earns.

Foreign borrowings by the national government approved by the BSP surged  by almost 83 percent to $17.7 billion in 2020 from $9.7 billion in 2019 as the pandemic-induced recession resulted in lower revenue take and higher spending for COVID response measures.

Latest data from the central bank showed the country’s external debt stock went up by 15.7 percent to $101.2 billion in end-June   from $87.45 billion in end-June last year as the government borrowed more to bankroll its COVID response measures.

Public sector external debt accounted for 59 percent or $59.9 billion of the total from January to June.

The national government accounted for 90.6 percent or $54.3 billion of the total public sector debt, while government-owned and controlled corporations, government financial institutions and the BSP cornered the remaining 9.4 percent or $5.6 billion.

On the other hand, the external debt of private companies amounted to $41.3 billion,  equivalent to a 40.8 percent share of the total debt pie.