Gov’t borrowings down 85% in August

MANILA, Philippines – The Aquino administration’s total borrowings in August fell nearly 85% year-on-year.

The amount borrowed by the government from local and international sources fell to P22.82 billion ($509.43 million)* in August from the P148.9 billion ($3.33 billion) recorded a year ago, data from the Bureau of the Treasury showed.

The total domestic borrowings in August was significantly lower than the P147.25 billion ($3.29 billion) in the same period a year ago, when the government issued retail treasury bonds in August 2013.

The local bond swap in August 2014 forms part of the government’s program to manage its liabilities, rebalance its domestic debt portfolio, foster efficient pricing of government securities, and enhance market trades for the republic’s domestic-issued instruments, the government earlier said.

The government also issued P3.24 billion ($72.32 million) of fixed-rate treasury bonds in August this year, while it incurred a net redemption of P1.34 billion ($29.31 million) in treasury bills.

Payments for domestic debt which matured in August amounted to P718 million, which means that the government’s net local borrowings stood at P19.85 billion during the said month.

Why borrow?

The government usually borrows funds to support its budget deficit and to pay for its maturing liabilities.

Domestic borrowings comprised bulk of the amount, as the government borrowed P20.57 billion ($459.40 million) from local creditors.

Meanwhile, the government borrowed P2.25 billion ($50.22 million) from foreign lenders, higher than the P1.65 billion ($36.83 million) in international borrowings a year ago.

Program loans amounted to P1.27 billion ($28.35 million), while the remaining P977 million ($21.81 million) was accounted for by project loans.

Meanwhile, payments for foreign debt amounted to P3.98 billion ($88.85 million), resulting in a net external redemption of P1.73 billion ($38.62 million) in August of this year.

Also, the government’s total borrowings fell by 43.52% to P252.06 billion ($5.63 billion) from January to August 2014.

Domestic borrowings accounted for the bigger share with P163.1 billion ($3.64 billion), while the government borrowed P88.95 billion ($1.99 billion) from the foreign market.

As a percentage of the country’s gross domestic product, the national government’s debt is expected to decline to 47% by end-December 2014.

The national government’s debt is seen to hit P6.32 trillion ($141.04 billion) by the end of this year, according to the Budget of Expenditures and Sources of Financing for 2014.

The document showed that 68.2% or P4.31 trillion ($96.19 billion) of the outstanding debt by end-2014 will be sourced from domestic creditors while the remaining 31.8% or P2.01 trillion ($44.86 million) will be loaned from foreign sources. – Rappler.com

 ($1 = P44.81)