Government borrows less in first 7 months

MANILA, Philippines - The government borrowed less in the first seven months of the year compared to same period in 2008 as it redeemed more debt papers than it issued during the period, latest data from the Bureau of the Treasury (BTr) showed.

Borrowings hit P276.23 billion from January to July this year, lower by P55.56 billion compared to the P331.79 billion the government borrowed a year ago.

The lower amount of borrowings is due to the net redemption of peso-denominated debt papers that matured in July. 

Total borrowings declined as the government redeemed P57.321 billion worth of Treasury bills (T-bills) in July and sold P25.730 billion, resulting in a net redemption of P31.591 billion.

Of the total amount, domestic borrowings, which comprised the bulk of state borrowings, amounted to P135.89 billion from January to July, lower than last year’s P285.62 billion.

The government borrows domestically through the issuance of Treasury bills and bonds.

Borrowings from external creditors, on the other hand, more than doubled to P140.34 billion during the seven-month period from only P46.16 billion last year.

Most of the foreign borrowings during the period came from last January’s global bond exchange where the government sold P71.39 billion worth of 10-year securities.

External borrowings comprise of project loans or those with counterpart funding from the government and program loans which pertain to the financial support incorporated in the budget.

Project loans from multilateral lenders Asian Development Bank (ADB), International Bank for Reconstruction and Development (IBRD), International Fund for Agricultural Development, Japan Bank for International Cooperation (JBIC), and Overseas Economic Cooperation Fund hit P11.57 billion.

Program loans, on the other hand, hit P21.31 billion and comprise of three items: the ADB-national government Governance Justice Reform (P7.06 billion), the IBRD Food Crisis Response (P9.62 billion) and the JBIC Development Policy Support (P4.63 billion).

The Governance Justice Reform Program aims to boost the resources available to the government to enable the efficient delivery of justice services. The Food Crisis Response Development Policy Operation, on the other hand, backs efforts aimed at promoting food security and helping the poor cope with the global crisis. The Development Policy Support, meanwhile, aims to strengthen the government’s anti-poverty programs.

The government has widened this year’s deficit ceiling to P250 billion or 3.2 percent of gross domestic product (GDP) from the previous program of P199.2 billion or 2.5 percent of GDP as fiscal authorties expect the global financial turmoil to leave a huge dent on state revenues. The wider shortfall, along with the need to hike expenditures to spur economic activity, will put more pressure on the government to borrow, officials said.