Government trims borrowings to P70 billion in December

MANILA, Philippines — The government has trimmed its borrowing program by more than half for December to slow the growth in the country’s outstanding debt heading into 2022.

The Bureau of the Treasury yesterday said it would only auction P30 billion in Treasury bills (T-bills) and P40 billion in Treasury bonds (T-bonds), or a total of P70 billion in December, down from P200 billion in November.

The T-bills will be sold in volumes of P2 billion for 91 days, P3 billion for 182 days and P5 billion for 364 days, and will be issued just three times until Dec. 15.

On the other hand, the Treasury will issue P20 billion worth of 10-year and seven-year T-bonds on Dec. 9 and Dec. 16, respectively, after which the agency will no longer hold any auction for the rest of the month to make way for the Christmas season.

National Treasurer Rosalia de Leon said the government would bank on its 26th issuance of retail Treasury bonds to fill in its remaining financing requirements. With the demand seen for RTBs, the Treasury can afford to cut the sale of T-bills and T-bonds for December.

Further, De Leon said the government has to bring down its borrowings for December to make sure that the amount is within the government’s debt program for the year.

“Given that we have been seeing strong demand for our ongoing RTB 26 issuance, we have the room to scale down our December auction sizes, especially the T-bills, (allowing) us to lengthen our domestic average residual maturity,” she told reporters.

“The reduction in our December borrowing program will ensure that we remain within our annual borrowing program and maintain our debt-to-GDP at sustainable levels,” she said.

The country’s debt stock has reached a new record of P11.92 trillion as of end-September. The debt pile has now risen to a 16-year high of 63 percent of gross domestic product (GDP).

In 2005, the Arroyo administration recorded a debt-to-GDP ratio of 65.7 percent after registering an all-time high of 71.6 percent the prior year. The international community observes a debt threshold of 60 percent of GDP as breaching this level may alarm credit monitors and multilateral lenders on the capacity of an economy to pay up.

The government expects a debt-to-GDP ratio of just 59.1 percent for 2021, 60.8 percent in 2022, before going down to 60.7 percent in 2023 and 59.7 percent in 2024.

Further, it plans to borrow P3.07 trillion in 2021 on a mix of 81:19 in favor of domestic sources to cover for a budget deficit worth P1.86 trillion, or 9.5 percent of GDP.