Gov’t borrowings fall 33% to P369 B in 2014

MANILA, Philippines - The government’s borrowings fell by 33 percent last year, due largely to higher revenues and prudent management of its debt.

Data from the Department of Finance showed that the government borrowed P369.06 billion from local and foreign sources to help fund state projects and programs and pay maturing obligations.  The amount represented 66.5 percent of the P554.7 billion in loans the state took out in 2013.

Of the total borrowings, the bigger share of P266.12 billion was sourced from the domestic market, mainly through the sale of Treasury bills and bonds.  The amount was 48.9 percent lower than the P520.3 billion secured the previous year.

Debt from foreign lenders, meanwhile, surged to P102.94 billion or three times the P33.8 billion recorded a year earlier.  This comprised P56.6 billion in program loans, global bonds swap  (P28.67 billion), and project loans (P17.64 billion).

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.

In December alone, borrowings reached P38.34 billion, of which P31 billion was sourced from domestic lenders.

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 mainly due to improving tax collections and intensified tax audits.

Finance officials expect the trend of declining borrowings to continue due to the country’s improving credit worthiness.

The outstanding debt of the government stood at P5.75 trillion as of the end of January, up 2.8 percent year on year as domestic obligations went up.

The government regularly holds auctions of securities to help fund the country’s budget.

For the whole of 2015, the Aquino administration plans to source 86 percent of its borrowings from the domestic market while the balance of 14 percent will come from foreign lenders.