The central bank approved fewer foreign loans by the public sector in the second quarter of this year as the government’s funding requirements for its COVID-19 pandemic response declined during the period.
In a statement, the Bangko Sentral ng Pilipinas (BSP) said its policy making Monetary Board approved a total of $2.8 billion of public sector foreign borrowings in the April to June period of 2021. This was 59-percent lower than in the same period in 2020 when $6.84 billion worth of foreign loans were approved.
The loan approvals for the second quarter consisted of one euro-denominated bond issuance amounting to 2.1 billion euros and one project loan amounting to $300 million.
“These foreign borrowings will fund the national government’s general financing requirements and COVID-19 pandemic response covering vaccine procurement and distribution,” the central bank said.
Under the 1987 Constitution, prior approval by the central bank, through its Monetary Board, is required for all foreign loans to be contracted or guaranteed by the Republic of the Philippines.
Similarly, earlier presidential orders also require 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 resources and ensures that external debt requirements are at manageable levels, to support external debt sustainability,” the agency said.
The second quarter’s loan approval numbers are similar to totals tallied in the previous quarter.
In the first quarter of 2021, the central bank’s Monetary Board gave the green light to public sector foreign borrowings totaling $2.84 billion.
These consisted of six project loans amounting to $1.44 billion, one program loan worth $600 million and two bond issuances amounting to $798 million.
The combined public sector foreign borrowings in the first quarter was 19.36-percent higher than the $2.38 billion recorded during the same period last year.
In contrast to this year’s more muted approvals, the central bank last year gave the green light to more foreign loan applications of the various government units for pandemic-related expenses.
In 2020, the BSP approved public sector foreign borrowings totaling $17.7 billion, consisting of: three bond issuances worth $6.6 billion; 15 project loans worth $3.7 billion; and 16 program loans with a total value of $7.5 billion.