Marcos admin to borrow P585B from local creditors in Q2

MANILA, Philippines — The Marcos administration is planning to borrow P585 billion from local creditors in the second quarter, the same as the programmed domestic borrowings in the first quarter, to bridge its budget deficit.

Based on the schedule posted on the Bureau of the Treasury ‘s (BTr) website on Monday, the government is targeting to raise P195 billion through sale of Treasury bills (T-bills) and P390 billion via Treasury bonds (T-bonds).

The BTr lined up five T-bills auctions in April  to raise P75 billion. In May and June, the state plans aims to borrow another P60 billion for each month via T-bills sale.

Meanwhile, the government will open the second quarter with four T-bond offerings in April in a bid to sell P120 billion worth of long-dated debt securities. In May, the BTr is targeting to raise a bigger P150 billion from the sale of Treasury bonds. It will cap the second quarter with four more T-bond issuances in June

The Marcos administration will cap the second quarter with four more T-bond issuances slated in June to raise P120 billion.

Interest rate concerns

Sought for comment, Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the government likely decided to keep the size of its new borrowing program unchanged from the first quarter due to a high interest rate environment.

“This may have been a function of relatively higher debt servicing costs amid higher global and local interest rates and still weaker peso exchange rate,” Ricafort said.

Documents from the budget department showed the Marcos administration is planning to borrow P1.85 trillion onshore in 2024. Of that amount, P672.1 billion will be raised via short-dated Treasury bills while P1.8 trillion will come from weekly auctions of T-bonds.

READ: PH plans to borrow P2.46T in 2024

Those borrowings are needed to help plug a projected budget hole of P1.39 trillion this year, which is equivalent to 5.1 percent of gross domestic product.

Based on latest government forecasts, the budget deficit, as a share of the economy, is expected to return to pre-pandemic level at 3.2 percent in 2027.

READ: PH debt still manageable, says Finance chief

Finance Secretary Ralph Recto said the government will remain “prudent” in its debt management by continuing to adopt a 75:25 borrowing mix in favor of domestic sources.

Moving forward, RCBC’s Ricafort said the record P584.86-billion Retail Treasury Bond issuance in February and a possible global bond sale later this year “might reduce the need for more local borrowings.”