Government borrowings hit P215 billion in September

MANILA, Philippines — The government borrowed P215.12 billion from domestic and foreign sources in September, putting pressure on its 2021 financing program with only three months left for the year.

The September borrowings reversed from the P209.4 billion net redemption a year ago, or when the government pays more debts than it obtained, based on records from the Bureau of the Treasury.

Domestic financing amounted to P166.95 billion from a net redemption of P249.98 billion, while external borrowings jumped by about 19 percent to P48.15 billion from P40.58 billion.

The government issued P187.95 billion worth of fixed rate Treasury bonds (T-bonds) in a sustained effort to get bulk of its resources from domestic investors. On the contrary, it paid P21 billion to Treasury bill buyers whose securities matured during the month.

On the other hand, program loans made up nearly 84 percent of foreign financing at P40.29 billion, the highest since P63.73 billion in July 2020. The government also availed P7.86 billion in project loans from bilateral and multilateral partners.

On a yearly basis, the government has accumulated P2.6 trillion in gross borrowings as of end-September, spiking by more than 15 percent from P2.26 trillion a year earlier.

Thus, the government can only afford to borrow at least P470 billion for October, November and December if it wants to land within its financing plan of P3.07 trillion for the year.

Broken down, domestic financing grew by close to 23 percent to P2.1 trillion in the nine months to September, while external borrowings dipped by almost eight percent to P506.67 billion.

In turn, the country’s outstanding debt surged to an all-time high P11.92 trillion as of end-September. With three months left, the government has surpassed its target of closing the year with a debt stock of P11.73 trillion or 59.1 percent of gross domestic product (GDP).

Maintaining the debt ratio at below 60 percent of GDP will allow the economy to carry on with its borrowing program with ease. However, breaching that threshold may force multilateral lenders to think twice about extending new loans to the Philippines.

The government hopes to reduce its budget deficit to 7.5 percent of GDP in 2022, 5.9 percent in 2023 and 4.9 percent in 2024 by reopening the economy and improving revenue collection.

As a result, borrowings to cover for the fiscal gap will be tempered to P2.47 trillion, P2.31 trillion and P2.37 trillion in 2022, 2023 and 2024, respectively.