Gov’t borrowings jump 82.5%

The government’s gross borrowings jumped 82.5 percent to P840.8 billion in the first half as it ramped up debt from both local and foreign sources.

The latest Bureau of the Treasury data showed that the national government’s combined domestic and external borrowings from January to June climbed from P460.8 billion a year ago.

Local borrowings, which accounted for the bulk of the end-June total, amounted to P615.4 billion, up from the P305 billion generated from the sale of treasury bills and bonds a year ago.

The remaining P225.5 billion borrowed from offshore debt markets or sourced from official development assistance loans from multilateral lenders and bilateral development partners such as China and Japan were also higher than the P155.8 billion in foreign debt secured during the same six-month period last year.

During the first half, project loans rose to P20.4 billion (from P19.7 billion a year ago), while program loans increased to P64.7 billion (from P21.4 billion).

The government also sold a bigger volume of renminbi-denominated panda bonds in China (P18.9 billion in May compared to P11.9 billion in March 2018) even as it issued a lower amount of dollar-denominated global bonds (P78 billion last January compared with P102.7 billion in February last year).

Since the Philippines returned to the euro debt market this year, the P43.5-billion worth it sold in May increased the country’s borrowings as of June.

As for domestic debt, Treasury data showed that the P121.8 billion in retail treasury bonds sold to small investors in June last year was dwarfed by the P235.8-billion worth issued last March.

End-June treasury bills and fixed-rate bonds also rose to P158 billion and P221.5 billion, respectively, from P66.6 billion and P116.7 billion a year ago.

In July, the Cabinet-level, interagency Development Budget Coordination Committee kept the 2019 borrowing program at P1.18 trillion, of which 73 percent will be sourced locally amid ample domestic liquidity.

Total gross borrowings next year will jump to a record high P1.4 trillion, with a borrowing mix of 75-percent domestic and 25-percent external, in line with the programmed wider budget-deficit cap equivalent to 3.2 percent of gross domestic product (GDP) as the government wanted to ramp up spending on public goods and services, especially infrastructure.

Even as the government’s borrowings will further rise, the share of debt to the economy is expected to slightly decline to 41.4 percent this year and next from 2018’s debt-to-GDP ratio of 41.9 percent.