Government foreign borrowings down to $13 billion in 2021

MANILA, Philippines — Foreign borrowings by the national government approved by the Bangko Sentral ng Pilipinas (BSP) declined by 26 percent to $13.1 billion last year from $17.7 billion in 2020.

Data released by the central bank showed public sector foreign borrowings approved by the BSP fell by 28.4 percent to $3 billion in the fourth quarter of 2021 from $4.2 billion in the same period a year earlier.

Foreign borrowings in the fourth quarter consisted of six program loans worth $2.5 billion and two project loans worth $500 million.

Of the total amount, the bulk or $2.7 billion will be used to bankroll the government’s pandemic response and economic recovery measures, while the remaining $300 million is for disaster risk reduction.

For 2021, the amount raised by the national government from bond issuances slipped by 6.2 percent to $6.2 billion from $6.6 billion in 2020.

Likewise, funds sourced from multilateral lenders plunged by 48.4 percent to $3.9 billion from $7.5 billion.

Data showed the Philippines tapped the offshore bond market four times last year.

The Monetary Board also approved nine program loans worth $3.9 billion and 12 project loans worth $3.1 billion.

Almost half or 45 percent of the total amount borrowed from foreign creditors were used to finance COVID-19 response measures including vaccine procurement, social protection, and support to economic recovery.

Another 45 percent or $5.9 billion was used for general financing requirements, while $400 million has been allocated to bankroll infrastructure projects.

All foreign loans to be contracted or guaranteed by the government needs 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 commencement of actual negotiations as mandated by the Letter of Instructions 158 issued in January 1974.

The BSP promotes the judicious use of resources and ensures that external debt requirements are at manageable levels, to support external debt sustainability.

Latest data from the Department of Finance showed the country’s foreign borrowings, including grants from multilateral agencies, to finance pandemic response measures reached $25.79 billion.

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