MANILA, Philippines — The lack of new offshore fundraising activity brought down the amount of foreign borrowings by the public sector that had been cleared by the Monetary Board (MB) in the first quarter.
The Bangko Sentral ng Pilipinas (BSP) reported Monday that its policy-making MB had approved a total of $2.87 billion worth of public sector external financing in the first three months of 2024. These consisted of two project loans worth $850 million and five program loans amounting to $2.02 billion.
The fresh borrowings will fund government projects on infrastructure ($850 million), as well as programs on policy reforms in health care ($910 million), digital transformation ($410 million), tax administration ($400 billion), and inclusive finance development ($300 million).
Keeping debt manageable
Overall, the total amount cleared by the MB was 48 percent lower than the external financing approved in the first quarter of last year, when the national government had sought the approval of the BSP for a US dollar-denominated bond issuance with a size of $3 billion.
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Under the law, prior approval of the MB is required for all foreign loans to be contracted or guaranteed by the government.
Similarly, all foreign borrowing proposals of the government, including those of agencies and state-run financial institutions, are required to be submitted for approval in principle by the MB before the commencement of actual negotiations.
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These steps are meant to help the BSP ensure that external debt requirements are kept at manageable levels, which is part of its mandate to support external debt sustainability.
Borrowing program
The Marcos administration is planning to borrow a total of P2.46 trillion from creditors at home and abroad in 2024 to help bridge its budget deficit, which is projected to hit P1.5 trillion this year.
Finance Secretary Ralph Recto had said the government will remain “prudent” in its debt management by continuing to adopt a 75:25 borrowing mix in favor of domestic sources. That means that the borrowing program this year will be composed of local debts worth P1.85 trillion and foreign financing amounting to P606.85 billion.
To diversify funding sources, Recto said the government is looking at various global bond markets, with a “potential curtain-raiser offering” this first semester.