Foreign borrowings of PH gov’t eased in Q1

The Monetary Board (MB) gave the green light to a total of $5.56 billion in government foreign borrowing in the first quarter of 2023, which covers partly the continuing need to address the impact of the COVID-19 pandemic.

According to the Bangko Sentral ng Pilipinas (BSP), MB-approved loans were 16 percent lower compared with the $4.8 billion that was approved in the same quarter of 2022.

Earlier this year, the national government issued $3 billion in US dollar-denominated bonds, the second time that the Marcos administration raised funds from the global commercial bond market.

Proceeds from the bonds are intended to support the financing of the administration’s general budget as well as financing and refinancing of assets in line with the government’s Sustainable Finance Framework.

Also, the national government availed of two project loans—one at $200 million related to infrastructure and another at $100 million related to education.

Further, there were five program loans totaling $2.26 billion that will support continuing COVID-19 pandemic response and recovery, among others.

The Philippine Constitution requires the prior approval by the highest policy making body of the BSP for all foreign loans that the public sector—the national government itself as well as its agencies and financial institutions —will take or guarantee.

Before actual negotiations can begin, proposals for foreign borrowings must be submitted to the Monetary Board for approval-in-principle.

The BSP says it promotes the judicious use of the resources and ensures that external debt requirements are at manageable levels, to support external debt sustainability.

According to the Bureau of the Treasury, as of end-February, the national government owed foreign lenders an equivalent of P4.31 trillion.

Foreign debt accounted for 31 percent of the government’s debt stock, which was pegged at P13.75 trillion. This included P9.44 trillion owed to domestic lenders.

At a Philippine economic briefing held on April 12 in Washington, BSP Governor Felipe Medalla said the government throughout various administrations has been behaving responsibly in terms of fiscal matters.

Medalla noted that a big chunk of the debt stock came from the issuance of peso-denominated bonds, and much of these is longer than two years.

“The financial and banking conditions of the Philippines are consistent with long-term growth—no shortcuts, no boom and bust.” he said. INQ