Bangko Sentral ng Pilipinas. (File photo / Philippine Daily Inquirer)
MANILA, Philippines — The central bank gave the green light to more foreign borrowings during the third quarter of the year for the national government meant to help the Philippine economy regain its footing after the devastation caused by the coronavirus pandemic.
In a statement, the Bangko Sentral ng Pilipinas (BSP) said its policy making Monetary Board approved $3.919 billion worth of foreign loans, representing a 47.7 percent increase over the $2.654 billion level reported during the same period last year.
These borrowings consist of five project loans amounting to $1.979 billion and six program loans amounting to $1.940 billion.
The central bank said that $1.458 billion of these foreign borrowings will fund the government’s infrastructure development, while $1.247 billion will be used for its response to the COVID-19 pandemic.
Agrarian reform and agriculture development, meanwhile will get $770 million in loan proceeds, while financial inclusion programs will receive $417.420 million, and local governance reforms will receive the balance of $26.5 million.
Under the 1987 Constitution, prior approval of the central bank is required for all foreign loans to be contracted or guaranteed by the Philippine government.
Marcos-era regulations also requires all foreign borrowing proposals by the national government, government agencies and government financial institutions to be submitted for approval-in-principle by the Monetary Board before commencement of actual negotiations.
“The BSP promotes the judicious use of the resources and ensures that external debt requirements are at manageable levels to support external debt sustainability,” it said.
In addition to the national government, several local government units also applied with the Monetary Board for approval for more loans this year, all meant to respond to the adverse effects of the pandemic.
For the first semester of 2020, the BSP received 93 requests for Monetary Board opinions from local governments on their proposed loans amounting to P25.1 billion. The number of requests were higher by 31 percent from 71 requests received in the second half of 2019.
Requests for Monetary Board opinions processed in the first half of this year came from 11 provinces, 13 cities and 69 municipalities.
Of the total number of local government requests, 78 applications or 83.9 percent were rendered a favorable Monetary Board opinion, with a total loan amount of P22.3 billion.
The processing of the remaining 15 requests were deferred due to incomplete documents or information submitted.
Among the 17 Philippine regions, the biggest number of LGU requests came from Region 12 at 14.1 percent.