Government borrowings swell to P1.7 trillion

The national government borrowed P1.72 trillion during the first half of 2020—more than double compared to gross borrowings a year ago—partly to finance the rising COVID-19 response costs.

The latest Bureau of the Treasury data showed that gross borrowings from January to June jumped 105 percent from P840.8 billion during the first six months of last year.

The combined gross domestic and external borrowings as of June were also bigger than the P1.02 trillion borrowed during the entire 2019 and exceeded the P1.4-trillion original financing program for 2020.

National Treasurer Rosalia V. de Leon on Saturday said the Treasury was currently calibrating the 2020 borrowing program “based on requirements” to fight the health and socioeconomic crises caused by the COVID-19 pandemic.

Also, the end-June total was nearing the combined borrowings during the years 2018 and 2019 of P1.9 trillion.

The bigger chunk or 76 percent of the national government’s financing during the January-to-June period was sourced locally and at P1.3 trillion, was more than double the P615.4 billion a year ago.

The government preferred to borrow more from domestic sources to temper foreign exchange risks while taking advantage of a financial system that is awash with liquidity.

As of June, the Treasury awarded a net of P310.4 billion in short-dated bills, P387.9 billion in fixed-rate bonds and a record P310.8 billion in retail treasury bonds (RTBs) issued last February.

De Leon had said the ongoing offering for five-year RTBs, which will end on Friday (Aug. 7), already exceeded the amount raised from three-year RTBs at the start of the year.

The Treasury also entered into a P300-billion repurchase agreement with the Bangko Sentral ng Pilipinas in March at the onset of the COVID-19 lockdown.

As for external borrowings, the end-June total of P413.5 billion was nearly double the P225.5 billion a year ago.

Program loans amounted to P216.3 billion; project loans, P11.1 billion; US-dollar denominated global bonds, P118.7 billion, and euro bonds, P67.3 billion.

In a separate report last week, the Treasury noted that the nine program loans obtained during the first half had been secured from multilateral lenders Asian Development Bank (ADB) and World Bank, of which six—two from the ADB and four from the World Bank—were for COVID-19 response.

Amid weak revenues due to a COVID-19-induced recession, the government was ramping up borrowings, which will jack up its outstanding debt to a record-high P9.6 trillion by the end of the year.

The national government’s debt stock already stood at P9.05 trillion in end-June.

The bigger 2020 debt stock will also raise the debt-to-gross domestic product (GDP)—the ratio reflecting a country’s ability to pay its obligations—to 49.8 percent, the highest since 2011.

The last time that the Philippines had a debt-to-GDP ratio above 50 percent was 50.2 percent in 2010. INQ