Gov’t borrowing down 31% to P86.6B in Q1

MANILA, Philippines - Government borrowings fell 31 percent in the first quarter of the year due to higher revenues and better management of debt.

Data from the Department of Finance showed that the government borrowed P86.6 billion from the domestic market and abroad to help fund state projects and programs and pay maturing obligations.

Of the total borrowings, the bigger share of P50.12 billion was sourced from foreign lenders, way more than the P3.23 billion that the government secured in the same period a year ago.

Foreign borrowings are done largely through the sale of sovereign bonds in the international capital market and by tapping cheap loans in the form of official development assistance (ODA) from multilateral development institutions.

The biggest sources of ODAs are the World Bank, Asian Development Bank and Japan International Cooperation Agency.

Domestic borrowings, mainly through the sale of Treasury bills and bonds, accounted for the balance of P36.48 billion, 70 percent lower than P123 billion a year earlier.

In March alone, borrowings reached P28.81 billion, down 37.8 percent from P46.35 billion in the same month last year. Of the total, P17.88 billion was sourced locally while the remaining P16.58 billion came from external sources.

The country has seen the ratio of its debt-to-gross domestic product decline in the past few years from a peak of more than 70 percent a decade ago to just 39.2 percent in 2013 mainly due to improving tax collections and intensified tax audits.

Finance officials expect the trend of declining borrowings to continue throughout this year given the country’s improving credit worthiness.