Foreign borrowings jump 43% in Q2
![Foreign borrowings jump 43% in Q2](https://media.philstar.com/photos/2024/07/22/3_2024-07-22_19-22-42.jpg)
MANILA, Philippines — The Philippines continued to borrow more from offshore creditors as foreign borrowings approved by the Bangko Sentral ng Pilipinas (BSP) surged by 43 percent to $3.9 billion in the second quarter.
The latest figure was $1.17 billion higher than the $2.73 billion recorded in the same period a year ago, the central bank said in a statement yesterday.
In the first half of the year, the regulator approved $6.77 billion worth of public sector foreign borrowings, 18.3 percent lower than last year’s $8.29 million.
The central bank said the approved borrowings for the second quarter consisted of one bond issuance worth $2 billion and three project loans amounting to $1.9 billion.
“These borrowings will fund the national government’s general budget financing and financing/refinancing of assets in line with the Republic of the Philippines’ Sustainable Finance Framework ($2 billion) and transport infrastructure projects ($1.9 billion),” the BSP said.
Based on separate central bank data, the country’s external debt service burden went down to 19.8 percent to $4.64 billion as of end-April from $5.78 billion in the comparable year-ago period.
Principal payments fell by 41.5 percent to $2.11 billion, while interest payments rose by 16.3 percent to $2.52 billion in the first four months of the year.
The debt service burden as a share of gross domestic product decreased to three percent in the first quarter from 4.3 percent a year ago.
All foreign loans to be contracted or guaranteed by the government need prior BSP approval under Section 20, Article VII of the 1987 Constitution.
Likewise, all foreign borrowing proposals of the national government, government agencies and government financial institutions have to be submitted for approval-in-principle by the Monetary Board before commencement of actual negotiations, as mandated under Letter of Instruction 158 issued in January 1974.
“The BSP promotes the judicious use of the resources and ensures that external debt requirements are at manageable levels, to support external debt sustainability,” the central bank said.
The Philippines borrows heavily from foreign and domestic creditors to finance the country’s budget deficit as it spends more than what it actually earns.
The budget shortfall ballooned as the pandemic-induced recession pulled down revenue collections, while spending soared to finance COVID-19 response measures.
The country’s outstanding debt hit another all-time high of P15.35 trillion as of end-May, of which 68 percent or P10.44 trillion came from domestic sources, while 32 percent or P4.9 trillion was sourced from foreign creditors.
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