The government borrowed significantly less in 2013 than in the previous year, as the increase in tax collection helped trim its budget gap.
Data from the Department of Finance showed that the government borrowed P554.7 billion last year, down by 42 percent from the 2012 level.
Borrowing proceeds were used to fund projects/programs whose costs were in excess of the government’s revenue collection, pay maturing liabilities and beef up liquidity.
Of the total borrowings, P520.93 billion was obtained from domestic sources, while P33.77 billion came from foreign creditors.
The government has adopted the policy of depending more on domestic sources than on foreign creditors to avoid substantial exposure to foreign-exchange risks.
Domestic borrowings are funds raised through the sale of treasury bills and bonds in the domestic capital market. Foreign borrowings are composed of proceeds of bonds sold offshore and of loans obtained from development lenders.
The Philippines’ biggest sources of official development assistance, or cheap loans meant to fund development initiatives, are the Asian Development Bank, the World Bank and the Japan International Cooperation Agency.
Domestic borrowings fell by 35 percent year-on-year, while foreign borrowings dropped by 78 percent.
The substantial drop in the domestic and foreign borrowings came with the decline in the state’s budget deficit.
The DOF earlier announced that the government incurred a budget deficit of P164.1 billion, down year-on-year by 32 percent.
Finance Secretary Cesar Purisima, in an earlier statement, credited the government’s rising tax collection for the drop in the deficit.
Higher tax collection came about as the Bureau of Internal Revenue strengthened its anti-tax evasion campaign, Purisima said. Part of the BIR’s campaign is the regular filing of cases against suspected tax cheats and release of advertisements against tax evasion.
The finance chief also cited modest improvement in the revenue collection of the Bureau of Customs, which is undergoing reforms.
The significant decline in the borrowings was also attributed to the decline in maturing obligations.
Of the total borrowings, P235.58 was used to pay liabilities. This amount marked a 44-percent decline from what the government spent for debt payment in the same period last year.
Maturing liabilities dropped partly because of the decline in interest rates to record lows last year. The historic-low rates allowed the government to spend less for treasury bill yields.