Government slashes borrowings by 63% to P101 billion in April

MANILA, Philippines —  As the government moves to reopen the economy to full capacity, it brought down its borrowings by 63 percent in April by minimizing both its domestic and external financing. According to the Bureau of the Treasury, the government cut its gross borrowings by 63 percent to P101.26 billion in April from P271.95 billion a year ago.

On an annual basis, financing from local lenders declined by 37 percent to P66.38 billion, while  foreign financing plunged by 79 percent to P34.88 billion.

The government borrowed from the domestic market by issuing P100.38 billion in fixed-rate Treasury bonds (T-bonds) in April. At the same time, it recorded a net redemption of P34 billion for Treasury bills (T-bills) during the month.

The government secures financing from investors by auctioning T-bills and T-bonds every week. However, the Treasury has made partial awards and even full rejections ever since the US Federal Reserve started raising interest rates in March.

Further, the government also returned to the Japanese debt market by issuing P28.55 billion in sustainability bonds, the first of its kind in the samurai portfolio.

For that offering, the Philippines sold samurai bonds – with tenors of five, seven, 10 and 20 years – to insurance giants and regional banks.

Aside from returning to the samurai market, the government accessed international financing by borrowing P6.33 billion in project loans from multilateral institutions.

Unlike last year, the government can afford to reduce its borrowings this year with fewer items to spend on.

In April 2021, it distributed subsidies to the poorest families and upgraded the capacity of state hospitals in response to the lockdowns imposed to contain the spread of the coronavirus Delta variant.

On a yearly scale, gross borrowings plunged by 28 percent to P1.18 trillion in the four months to April from P1.65 trillion during the same period in 2021. External financing grew by nine percent to P267.91 billion, but domestic borrowings slumped by 35 percent to P915.49 billion.

For 2022, the government programmed to borrow P2.47 trillion, of which P1.91 trillion would come from domestic sources while P560.58 billion would originate from abroad.

The government cut its borrowings by six percent to P2.58 trillion last year from P2.74 trillion in 2020 as it settled some of its pandemic debts, such as the P500 billion in provisional advances from the Bangko Sentral ng Pilipinas, before 2021 ended.