Borrowings by the national government dropped in the first three quarters from the year-ago level, aided largely by the decline in maturing debts that it had to pay.
The government borrowed P477.93 billion from January to September, down 20 percent year-on-year, documents from the Department of Finance showed.
Proceeds of state borrowings are used to finance expenditures in excess of tax and other revenue collection as well as to pay liabilities to foreign and domestic creditors.
The government earlier reported that its expenditures in the first three quarters of the year exceeded revenue collection by P101.2 billion.
The government also paid P212.05 billion in maturing liabilities during the period. This was 37-percent lower than what it spent for debt payments in the same period last year.
The balance will be used to help cover the government’s expenditure requirements and maturing obligations for the remainder of the year.
Of the borrowings secured from January to September, P449.93 billion was sourced from the domestic market through the sale of treasury bills and bonds. The amount represented an 11-percent decrease from the domestic borrowings in the same period last year.
The government has adopted the policy of borrowing heavily from the domestic than the foreign market in order to avoid exposure to substantial foreign-exchange risk.
The preference for domestic borrowing is also due to the enormous liquidity in the country kept by banks.
Foreign borrowings accounted for P28 billion of the total for the nine-month period. This amount marked a 71-percent year-on-year decline.
For this year, all foreign borrowings are in the form of official development assistance (ODA) from international development institutions, led by the Asian Development Bank, the World Bank and the Japan International Cooperation Agency.
The government decided not to sell bonds in the international capital market in a bid to help ease dollar inflows and, in the process, temper the appreciation of the peso.
Last year, the peso became one of the fastest-appreciating currencies against the dollar on the back of rising inflows of remittances, foreign portfolio investments and infusions in the business process outsourcing (BPO) sector.
While a strong peso has its advantages, a substantial appreciation of the local currency elicited complaints from the export sector, whose goods became more expensive in dollar terms and, therefore, less competitive.
The government, however, is considering going back to the international capital market next year for its fund-raising activities. Since ending last year at 41.05, the peso has depreciated and now hovers in the 43-to-a-dollar territory.