MANILA, Philippines — Foreign loans will rise by nearly three fourths next year under the Duterte administration's borrowing program, consistent with a thrust that will see it finance infrastructure projects using external money.
In total, the government will borrow P888.23 billion next year, up 22.05 percent from this year's P727.74-billion program, data from the Department of Budget and Management showed.
Broken down, gross foreign borrowings will amount to P176.27 billion, while their domestic counterparts will reach P711.96 billion.
The government borrows from local and international markets to finance its budget deficit, programmed to hit P523.6 billion in 2018, and pay existing debts.
While the Duterte administration is continuing a practice in recent years to source bulk of borrowings onshore, it decided, starting this year, to rely more on loans than bond issuances for foreign funding.
Bond issuances is a fund-raising method where the government issues securities to investors in exchange for funds.
Unlike loans, money raised from bonds is not tied up to any conditions aside from interest rate.
For 2018, DBM data showed that foreign loans will rise 72.1 percent to P125.27 billion, while foreign bonds will decline by more than half to P51 billion.
Loans are divided into program and project loans. The former is meant to finance general development programs which the government may specify, while the latter is for more specific undertaking.
For program loans, DBM data showed this will be sourced from multilateral organizations namely the World Bank, Asian Development Bank and Japan International Cooperation Agency.
There was no detailed information provided for project loans.
In his State of the Nation Address, President Rodrigo Duterte reiterated that the government will ask China to help it fund its P8-trillion infrastructure program until 2022.
Chinese help may be in the form of grants or loans. Bilateral loans from other countries are usually not included in the budget.
Analysts have warned against the Philippine government borrowing heavily in loans, much more from China, whose other lending programs globally have been involved in corruption allegations.
Officials, in defense, said using loans will fast track building of infrastructure projects.
In the domestic front, the government will divide its funding needs into P640 billion in Treasury bonds and P71.96 billion in Treasury bills.