Gov’t borrowings down 34%

MANILA, Philippines - State borrowings continued to trend downward, declining by more than a third in the first semester as the government did not see any immediate need for more cash.

Latest data from the Department of Finance showed that the government borrowed P163.68 billion from January to June, down 33.75 percent from P181.06 in the same period a year ago.

The downward trend underlines the strength of the government’s finances even as the country recovers from a string of natural calamities particularly the devastation caused by Super Typhoon Yolanda.

Domestic borrowings accounted for the bulk of total obligations at P106.6 billion.  This marked a year-on-year drop of 55.25 percent.

Borrowings from external sources, however, soared to P57.08 billion or an increase of more than six-fold from only P8.85 billion the previous year.

Foreign borrowings were in the form of program loans (P16.03 billion), global bonds (P28.57 billion) and project loans P12.38 billion.

The government borrows funds to pay maturing obligations and plug the deficit in its budget.

In June alone, borrowings dropped 39.5 percent to P26.62 billion from a year ago. Of the amount, the bulk or P26.61 billion came  from local creditors.

The government regularly holds auctions of Treasury bills and bonds to help fund the country’s budget and provide investors with fresh investment options. 

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

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