Data from the Department of Finance indicated that the country’s foreign debt during the first 10 months of 2002 amounted to P1.319 trillion while domestic borrowings amounted to P1.446 trillion.
As its actual borrowing ballooned in the wake of its gaping budget deficit, the National Government’s contingent debt also increased to P549.314 billion during the same period, due largely to government guarantees on foreign borrowings of private and government-owned corporations.
According to the DOF, the government’s domestic debt was broken down into P1.418 trillion worth of government securities and loans availed by agencies amounting to P15.862 billion.
The government has been resorting to heavy domestic borrowing to finance its deficit, taking advantage of the depressed demand in the domestic credit market. Foreign borrowing, on the other hand, was broken down into P696.449 billion direct loans and P9.880 billion worth of assumed loans. Foreign denominated securities, on the other hand, amounted to P662.664 billion.
The country’s foreign debt generated from the issuance of foreign denominated securities was mostly in US dollar bonds that amounted to an equivalent of P519.259 billion, followed by Eurobonds which amounted to an equivalent of P53.760 billion.
Japanese yen bonds, amounted to P49.6 billion as of October 2002.
According to the DOF, about P596.551 billion of the direct foreign loans were availed of by government agencies while P90.017 billion was re-lent to government-owned and controlled corporation.
The government’s contingent obligations amounted to P549.314 billion. The bulk of this was foreign contingent obligations amounting to P530.228 billion while domestic contingent debt amounted to only P19.085 billion.
Of the total contingent obligations, NG direct guarantee on GOCC loans amounted to P533.595 billion, broken down into P514.692 billion worth of foreign loans and P18.902 billion worth of domestic loans.
The government also assumed P15.535 billion worth of foreign loans and P183.427 million worth of domestic loans guaranteed by government financial institutions.
With the 2003 budget deficit expected to hit P202 billion this year, the Arroyo administration is planning to borrow even more, laying out a P182 billion foreign borrowing plan, which would account for 48 percent of the total borrowing program.
The rest, according to Finance Secretary Jose Isidro Camacho, would be borrowed from the domestic credit market through the issuance of various government securities ranging from the usual Treasury bills to bonds and dollar-linked instruments.
The Arroyo administration has increased its planned dollar-linked peso notes from P3 billion to P5 billion, saying the demand for the instrument had increased exponentially as the banking industry continued to suffer the absence of credit demand in the private sector.