Gov’t borrowings up 46.5% as of end-Sept

The government’s borrowings jumped by nearly half year-on-year to P410.2 billion as of end-September on the back of more local debt issuances.

The latest Bureau of the Treasury data showed that gross borrowings during the first nine months grew 46.5 percent from P279.9 billion a year ago.

End-September domestic borrowings rose to P325.8 billion from P174.9 billion last year.

Fixed-rate treasury bonds accounted for the bulk or P197.2 billion, while P28.6 billion were from the sale of treasury bills.

External borrowings, on the other hand, declined to P84.4 billion as of end-September from P105 billion last year.

In the first nine months, multilateral lenders’ program loans amounted P28.5 billion, project loans reached P14.6 billion, while the government’s global bond sale in February raised P41.3 billion.

As domestic interest rates remained relatively low, the Duterte administration wanted to finance its programmed wider deficit of 3 percent of gross domestic product (GDP) in the next six years through a borrowing mix of 80-percent local and 20-percent foreign.

Meanwhile, as President Duterte’s visits to China and Japan last month generated sizeable commitments for official development assistance (ODA) from the two countries, economic managers said they were looking at securing more bilateral ODA than those from multilateral institutions.

“We will borrow given the best terms and conditions. For example, if we can borrow at 0.25-percent interest rate, 40 years to pay from a bilateral source compared to 5-percent interest, 25 years to pay from a multilateral source, other things equal, then it’s a no-brainer: We borrow from the bilateral source,” Budget Secretary Benjamin E. Diokno said in a recent text message.

“The speed by which the loan will flow into the economy will also matter,” Diokno added.

The budget chief said a bilateral ODA was both cheaper and faster to avail than a multilateral ODA.

Socioeconomic Planning Secretary Ernesto M. Pernia agreed that the government would prefer to borrow from “whichever is cheaper and faster.”

“The trips to China and Japan simply afforded more options,” said Pernia, who heads state planning agency National Economic and Development Authority.

A check with Neda’s website showed that across the pipeline of ongoing ODA-funded projects as of September, the bulk came from multilateral lenders Asian Development Bank, International Fund for Agricultural Development and the World Bank worth a total P247.2 billion.

Bilateral ODAs, meanwhile, from development agencies as well as the governments of France, Germany, Japan, South Korea and Spain combined reached only P33.2 billion, although a number of bilateral ODA loans were under consideration by the Philippine government.

Pernia had said that President Duterte’s visit to China resulted in $6 billion (about P291 billion) in ODA commitments.

The Japanese, for its part, had been the Philippines’ top ODA grantor from 1993 to 2013, Neda data showed.

As bilateral ODAs were cheaper, Pernia said the government might pursue infrastructure projects through a mix of public-private partnership (PPP) and ODA or government funding.

Diokno earlier said the Duterte administration preferred what he called “hybrid PPPs” wherein “the government takes care of the financing and the construction while the operations will be entrusted to the private sector.”

“This way, the government can take advantage of lower borrowing rates through development assistance. At the same time, it will allow the private sector to efficiently manage operations of PPP projects,” Diokno explained.