Gov’t tempers debt appetite

Gross borrowings of the government fell in October, mainly due to lack of major fundraising activity unlike a year ago when the Marcos administration had offered retail dollar bonds to onshore investors.

Figures from the latest cash operations report of the Bureau of the Treasury (BTr) showed that the state had raised a total of P129.26 billion in gross financing from local and foreign sources last month, down by 42.6 percent year-on-year.

Broken down, new domestic borrowings contracted by 61.37 percent in October to P67.46 billion—of which P22.46 billion came from the weekly sale of short-term Treasury bills while P45 billion were raised via fixed-rate Treasury bonds.

But the decline was mainly due to absence of a special debt offering this year. In October 2023, the Marcos administration had raised P71.78 billion from its sale of retail onshore dollar bonds.

Gross external financing, meanwhile, soared by 22.21 percent to P61.8 billion on higher availment of project and program loans.

Overall, total state borrowings in the first 10 months amounted to P2.43 trillion, marking a 22.73-percent increase from the comparable period in 2023.

Of that amount, year-to-date gross financing from creditors onshore reached P1.86 trillion, up by 22.37 percent.

Foreign investors lent a total of P566.25 billion to the government, larger by 24.09 percent.

For this year, the Marcos administration had set a P2.57-trillion borrowing program to bridge a budget deficit that is capped at P1.5 trillion, or 5.6 percent of gross domestic product.

The 10-month fiscal gap stood at P963.9 billion, accounting for 64.94 percent of the deficit limit of the Marcos administration, which is aspiring for an upgrade to “A” credit rating in the coming years.

As a share of the economy, the BTr said the budget shortfall in the first three quarters had stood at a “manageable” level of 5.14 percent, albeit still far from the prepandemic size of 3.38 percent back in 2019.— Ian Nicolas P. Cigaral INQ