Gov’t borrowings doubled to P33.8B in Oct.

A MORE than P16-billion loan from Manila-based multilateral lender Asian Development Bank (ADB) that came in last October jacked up the government’s total borrowings that month to P33.768 billion, the latest Treasury data showed.

In October, the ADB’s P16.412-billion Increasing Competitiveness for Inclusive Growth Subprogram 2 loan to the Philippines jacked up to P18.888 billion the government’s gross external borrowings from just P880 million in the same month last year.

The Increasing Competitiveness for Inclusive Growth Subprogram 2, whose loan agreement was signed by the Philippine government and the ADB last February, was intended to “provide support for [the Philippines’] key reform priorities aimed at employment generation by increasing competitiveness in the economy using an inclusive approach through the labor market.” The program is expected to be completed on Dec. 31 this year, according to the loan agreement.

Gross domestic borrowings from the auction of treasury bills and bonds, meanwhile, dropped to P14.88 billion in October compared to P16.04 billion a year ago.

The combined gross external and domestic borrowings in October was higher by 99.6 percent than the P16.92 billion recorded in the same month last year.

At the end of the first 10 months, government borrowings totaled P313.704 billion, higher than the P297.017 billion a year ago.

End-October foreign borrowings increased to P123.925 billion from P95.18 billion last year. The amount borrowed domestically as of end-October, meanwhile, decreased to P189.779 billion from P201.837 billion a year ago.

The borrowing program for this year is 75-percent domestic and 25-percent foreign, as “ample domestic liquidity will allow the government to source majority of its financing needs from domestic market,” the Cabinet-level, interagency Development Budget Coordination Committee said in its midyear report.

In January, the government borrowed offshore through the sale of $2-billion worth of 25-year bonds at a record-low coupon of 3.95 percent. Of the proceeds of this global bond issuance, the larger chunk of $1.5 billion was used to swap and retire old debt paper previously issued at higher rates and maturing between next year and 2034, while $500 million will be infused into the budget.

Next year, the government plans to borrow P674.8 billion, lower than this year’s program of P710.8 billion, to slash the debt stock or the share of outstanding debt to the gross domestic product to a record-low of 41.8 percent.

In 2016, domestic borrowing would compose 85 percent of the total or P570.2 billion. The government would also borrow P104.6 billion from foreign sources next year—P54.1 billion in program loans, P17.1 billion project loans, and P33.4 billion in bonds and other inflows.

The Monetary Board has approved the sale offshore of up to $2 billion in bonds next year, while the special authority from the Office of the President to do so is still pending approval.