The government borrowed significantly less in the first five months of 2013 compared with year-ago level, as the drop in its maturing obligations eased the pressure on the state to raise funds.
Data from the Department of Finance showed that government borrowings in January to May hit P203.08 billion in January to May, down by 46 percent from P377.85 billion in the same period a year ago.
Despite the low-interest rate environment, the government opted to stick with its borrowing program in the first five months. National Treasurer Rosalia de Leon earlier said there was no immediate need for more cash.
The government borrows from the domestic market through sale of treasury bills and bonds in monthly auctions. It borrows from foreign sources through the sale of sovereign bonds and tapping loans from development institutions, such as the World Bank and the Asian Development Bank.
Domestic borrowings in January to May accounted for the bulk of the total obligations at P195.11 billion, was down by 31 percent from P282.61 billion last year. Foreign borrowings reached P7.97 billion, down by 92 percent from P95.24 billion in the same period last year.
The 96:4 borrowing mix in favor of domestic sources during the first five months this year was due to the government’s conscious effort to lessen its dependence on foreign borrowings.
Finance Secretary Cesar Purisima earlier said the government found it prudent to secure most of its funding requirements from the domestic market not only because of low interest rates but also because of the enormous liquidity in the country.
He said the government did not have to expose itself to significant foreign-exchange risks by borrowing offshore given the ample supply of liquidity in the domestic market.
Bangko Sentral ng Pilipinas officials also said that borrowing more from overseas would lead to increased inflows of dollars into the country which, in turn, would lead to further appreciation of the peso.
Last year the peso was one of the fastest-appreciating currencies against the dollar but after closing at 41.05 to $1 during the last trading day of 2012, it started depreciating. The peso currently hovers the 43-to-a-dollar territory.
In the meantime, De Leon said the government, after registering lower borrowings as of May, was considering to pre-fund portion of its 2014 expenditure requirements.
She said the government intended to take advantage of funds that would be withdrawn from the central bank’s special deposit account (SDA) facility.
The Bangko Sentral ng Pilipinas recently issued a directive prohibiting retail funds from being placed in SDAs. The BSP gave banks until the end of July to withdraw at least 30 percent of the said funds and until the end of November to pull out the balance.
De Leon said funds going out of the SDA facility are seen to push demand for government securities. This provides opportunity to borrow at an even lower cost for its 2014 expenditure requirements.