Government borrowings hit P1.9 trillion as of July

THE government raised P1.857 trillion from both domestic and foreign lenders in the first seven months of the year, as it borrowed more to fund the growing expenses related to the pandemic.

Data from the Bureau of the Treasury (BTr) showed National Government gross borrowings surged 121% from the P839.7 billion logged in the same period in 2019. Three-fourths were sourced domestically, with the rest from foreign sources.

Since May, the government’s borrowings have already exceeded the P1.02 trillion it raised for the entire 2019.

Borrowings reached P135 billion in July alone, a turnaround from the P2.9 billion in net redemptions logged in the same month last year.

The July figure was 37% lower than the P213 billion raised in June.

Net redemption occurs when more debt repayments were made than new debts incurred.

BTr data also showed local borrowings reached P66.84 billion in July, dropping 57% month on month and a reversal of the P4.305 billion of net redemptions made in July 2019. It issued P36.84 billion in Treasury bills (T-bills) and P30 billion in Treasury bonds (T-bonds) through its weekly auctions in July.

The Treasury did not make any amortizations that month.

Also, the government raised P67.7 billion from external lenders in July, climbing by 44% year on year and by 68% from June.

In July, the government obtained P63.73 billion of program loans and P3.96 billion in project loans. It paid P1.527 billion for its maturing external debts.

Minus the debt repayments, the BTr’s net borrowings stood at P133 billion, against the P2.9 billion of net redemptions logged a year ago.

The government secured two loans from multilateral partners in July to beef up its war chest against the coronavirus pandemic and support ongoing projects: $459 million (P22 billion) from the Japan International Cooperation Agency and $370 million (P18 billion) from the World Bank.

Year to date, gross domestic borrowings totaled P1.376 trillion, up 125% from a year ago.

Broken down, the BTr has issued P347.2 billion in T-bills, P417.9 billion in T-bonds, and P311 billion in retail Treasury bonds. It also includes the outstanding P300-billion securities availed by the central bank in April under a repurchase agreement.

The Treasury has paid a total of P246.2 billion in amortization, of which P185.2 billion were from the bond sinking fund.

Meanwhile, the government raised P481.15 billion from foreign sources as of July, up 110% from the same period last year.

Program loans obtained from its multilateral and bilateral partners hit P280 billion while project loans stood at P15 billion.

In the international debt market, the government raised P118.7 billion via the dollar-denominated global bonds issued in May, and P67.3 billion in euro-denominated notes sold in January.

Excluding debt repayments, the government’s net borrowings were at P1.681 trillion in the seven month period, 131% higher than the P729.3 billion recorded in the same period last year and way past the P876.3 billion logged for the entire 2019.

The government plans to borrow P3 trillion this year to plug its budget deficit which is seen widening to 9.6% of gross domestic product. It plans to maintain a 74:26 borrowing mix, in favor of domestic lenders to minimize external shocks and volatilities. — Beatrice M. Laforga