Government borrowings drop 81% to P118 billion in August

MANILA, Philippines — The government slashed its borrowings by nearly 81 percent to P117.74 billion in August as financing from both onshore and offshore sources dropped by double digits.

According to the Bureau of the Treasury, borrowings declined from P612.91 billion a year ago when the government sold P516.34 billion in Retail Treasury bonds (RTBs) to bolster its pandemic resources.

Domestic borrowings, accounting for bulk of the August volume, went down by about 83 percent to P100.96 billion, while external financing plunged by more than 41 percent to P16.77 billion.

On the domestic end, the government borrowed P132 billion from investors through the auction of fixed rate T-bonds during the month. Mitigating this, it posted a net issuance of P31.03 billion in Treasury bills, as payments outpaced the sale of short-dated securities.

On the other hand, the government took up P12.17 billion worth of project loans and P4.6 billion in program loans in August. Further, it avoided the bond market abroad, with zero issuance on any foreign denominated debt papers.

For the year, gross borrowings slipped by over three percent to P2.38 trillion in the eight months to August from P2.46 trillion a year ago, based on records from the Treasury.

By segment, the domestic account fell by close to two percent to P1.92 trillion, while the foreign amount decreased by more than 10 percent to P458.5 billion.

Broken down, over 47 percent of domestic financing at P911.86 billion originated from fixed rate T-bonds, followed by the P540 billion in short-term borrowings from the central bank acquired in January and the P463.32 billion in RTBs sold in March.

On foreign borrowings, global bonds (P146.17 billion), euro bonds (P121.96 billion) and samurai bonds (P24.18 billion) comprised nearly 64 percent of total in program loans and P66.49 billion in project loans.

The government plans to borrow P3.07 trillion this year, sourcing at least 81 percent from domestic lenders, to cover for a fiscal deficit seen to hit P1.85 trillion or 9.3 percent of the economy. By the end of 2021, the country’s outstanding debt is projected to amount to a record P11.73 trillion.

However, gross borrowings will be tempered to P2.47 trillion next year, P2.31 trillion in 2023 and P2.37 trillion in 2024, as revenues begin to pick up through the reopening of the economy.

Last year, government borrowings almost tripled to P2.74 trillion from P1.01 trillion in 2019, due to the capital requirements in containing the spread of the coronavirus.