Gov’t borrowings down 41.4% in September

MANILA, Philippines – Lower year-on-year local borrowings pulled down the Aquino government’s gross borrowings to 41.39% as of end-September this year.

The decline though is lower by 43.61% versus the drop of 85% in end-August 2014.

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

The amount borrowed by the government from local and international sources fell to P280.1 billion ($6.23 billion*) in the first 3 quarters versus the P477.93 billion ($10.64 billion) recorded a year ago, data from the Bureau of the Treasury (BoT) showed.

The government borrowed P185.8 billion ($4.14 billion) from local creditors. Domestic borrowings comprised the bulk of the amount.

But as of end-September, the total domestic borrowings dropped 58.71% from the P449.93 billion ($10.01 billion) posted in the same period in 2013.

Out of the domestic bond exchange conducted in August, P18.68 billion ($415.53 million) was raised from the activity, the BoT reported.

The local bond swap 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 previously said.

Fixed-rate treasury bonds amounting to P202.9 billion ($4.51 billion) was also issued during the same period, while it incurred a net redemption of P35.78 billion ($796.35 million) in treasury bills.

In September alone, the government’s total borrowings fell by 28.91% to P22.5 billion ($500.78 million).

For that month, domestic borrowings accounted for the bigger share with P17.16 billion ($381.93 million).

A total of P5.35 billion ($119.07 million) from the foreign market.

Higher international borrowings

The government borrowed P94.3 billion ($2.10 billion) from foreign lenders, higher than the P28 billion ($622.91 million) in international borrowings from the same period in 2013.

Program loans amounted to P55.08 billion ($1.23 billion) and project loans hit P10.55 billion ($234.71 million).

Payments for foreign debt amounted to P77.15 billion ($1.72 billion), resulting in a net external borrowings of P17.15 billion ($381.70 million).

The national government’s debt is seen to hit P6.32 trillion ($140.66 billion) by the end of this year, according to the Budget of Expenditures and Sources of Financing for 2014.

By end-2014, 68.2% of the outstanding debt or P4.31 trillion ($95.82 billion) will be sourced from domestic creditors.

The remaining 31.8% or P2.01 trillion ($44.72 billion) will be borrowed from foreign sources.

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. – Rappler.com

*($1 = P44.95)