Gov’t to borrow P700.8 B from local, foreign creditors

MANILA, Philippines - The government is set to borrow about P700.8 billion from both domestic and foreign sources for 2015, according to data from the Department of Finance.

The programmed gross borrowings for next year represent a four percent decline from the P730.03 billion planned this year.

Of the P700.8 billion, P606.1 billion will come from the domestic market and the remaining P95.7 billion from foreign lenders.  This would be equivalent to a borrowing mix of 86:14 in favor of domestic credit.

The bulk of external gross borrowings or P54.4 billion will comprise of program loans while P32.6 billion will be in the form of bonds and P8.7 billion in project loans.

The government has vowed to stick to its strategy of relying more on local borrowings to help bridge a deficit that is forecast to be two percent of gross domestic product (GDP). 

Governments often borrow money to fund additional spending they incur. The higher the fiscal deficit, the higher will be the borrowing requirements of the government. 

If there is an unforeseen increase in expenditure beyond what was projected at the time of budgeting or an unforeseen decline in revenue due to any reason, the government has to borrow more than the planned amount.

The country’s economic managers have committed to take more steps towards fiscal consolidation.  Efforts will be to keep fiscal deficit within the budgeted target of two percent through 2016.

To keep the house in order, the Aquino administration is looking at boosting revenues through improving governance, institution of key economic reforms and more efficient revenue collections.