RP expects $900 million in program loans this year

MANILA, Philippines - The government expects $900 million worth of program loans for budgetary support to come in by yearend, National Treasurer Roberto Tan said yesterday.

Tan said a $500-million program loan from the Asian Development Bank (ADB) would come in by September while some $400 million would come in by December.

“The $500-million loan will come in by next month. It will be for budgetary support,” Tan said.

The $400-million loan, meanwhile, will come from the ADB and other multilateral lenders, to be used also for budgetary support.

The government borrows from local and foreign creditors for its budgetary needs.

In the first seven months of the year, the government borrowed less compared to same period in 2008.

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

Of the total amount, domestic borrowings, which comprised the bulk of government 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 (T-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 hit P11.57 billion during the seven-month period while program loans hit P21.31 billion.

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 authorities 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.

For 2009, the government has programmed to borrow P451.8 billion from the domestic market and P209.1 billion from external sources.