PHILIPPINE sovereign borrowing from commercial sources is expected to decline this year as the economy emerges from its steep 2020 downturn, according to S&P Global Ratings.

“(Strong growth) should help stabilize revenue and help the government narrow its deficit somewhat, moderating its commercial borrowing needs relative to 2020,” S&P sovereign analyst Andrew Wood said in an e-mail.

S&P expects the economy to grow by 9.6% this year following a record 9.5% contraction in 2020.

In a note, “Sovereign Debt 2021: Asia-Pacific Central Governments to Borrow $4.1 trillion,” S&P Global said Philippine long-term commercial borrowing will likely hit $32.3 billion this year, down from $54.4 billion in 2020.

Overall borrowing, both long-term and short-term, including from non-commercial sources at lower rates, is expected to amount to $200 billion this year, against $189.4 billion in 2020, it said.

Governments across the region are expected to increase commercial borrowing this year as they continue to deal with the pandemic.

“A number of smaller issuers in Southeast Asia are projected to borrow significantly more this year than in the years before 2020,” S&P said.

This year, the Philippine government plans to borrow P286 billion via foreign currency-denominated bonds and P1.532 trillion in fixed-rate treasury bonds, according to the financing plan posted on the Department of Budget and Management website.

The budget deficit in 2020 more than doubled to P1.371 trillion as the government raised spending as revenue fell in a bid to contain the pandemic. The deficit is equivalent to 7.63% of gross domestic product (GDP), against 3.38% in 2019.

In 2021, the fiscal deficit is projected at 8.9% of GDP, with the government expecting gross borrowing of about P3.03 trillion. — Luz Wendy T. Noble