Gov’t plans to cut borrowings in 3rd quarter

The national government may borrow less in the next three months after falling behind spending targets in the first half of the year despite efforts to speed up disbursements.

This comes amid significant year-on-year increases in revenue collections by the state’s two main money makers, the bureaus of Internal Revenue (BIR) and of Customs (BOC), which have led to a nearly balanced budget in the four months to April.

“We are open to reducing the volume [of issuances] considering the available cash that we have,” said Sharon Almanza, deputy treasurer at the Bureau of the Treasury. “The borrowing program will possibly be lower than the second quarter,” she told reporters.

In the second quarter of 2014, the Treasury issued P135 billion in short-term treasury bills and long-term treasury bonds as the government sought to finance the expected shortfall in collections relative to spending plans.

However, partly due to slower spending, the government’s fiscal deficit at the end of April shrank to a measly P3.3 billion, latest data showed. This followed a record monthly surplus of P80.9 billion in April, which nearly wiped out the fiscal shortfall for the previous three months.

Actual disbursements amounted to P143.6 billion for April, down 6 percent or P9.6 billion year-on-year.

Netting out interest payments, the primary surplus for April was P94.3 billion, which was 56 percent or P33.8 billion higher than the comparable figure last year. This brings the primary balance for the first four months of the year to a surplus of P113.3 billion.

Revenue collections for the four months were significantly better than a year ago. Although both missed their respective targets, the BIR and BOC saw collections climb 7 percent and 22 percent, respectively.

For next year, Almanza said the government would continue to rely more heavily on the domestic market for financing, given the availability of ample liquidity in the economy.

As much as 86 percent of the country’s financing needs would be sourced locally, while the balance of about $2.2 billion would be borrowed abroad, Almanza said. Most of this, she said, would be overseas development assistance (ODA) loans. A “token” amount would also be borrowed through the issuance of global dollar bonds.

For this year, the government wants to maintain a borrowing mix of 85 percent from the domestic market and 15 percent from overseas.