THE government is eyeing to borrow P3 trillion next year in order to fund more than half of its spending plan and plug the ballooning deficit, Finance Secretary Carlos G. Dominguez III said on Thursday.
“For 2021, we expect to borrow roughly P3 trillion, roughly the same as what we (plan to borrow) in 2020,” he said in an online press briefing on Thursday.
This represents 66.67% of the P4.506-trillion proposed budget ceiling for next year.
The P3-trillion borrowing plan this year makes up 69% of the P4.34-trillion budget, and nearly three times higher than the P1.02 trillion raised for full-year 2019.
“Our borrowing plan is in place and definitely, it is sufficient to cover our needs this year and next year,” Mr. Dominguez said, noting that the government’s programmed borrowings will be reduced to P2.3 trillion in 2022.
The government will also maintain a 75:25 borrowing mix ratio, in favor of domestic sources to minimize foreign exchange risks and volatility, he added.
National Treasurer Rosalia V. de Leon said the Bureau of the Treasury will exhaust conventional methods in raising funds to plug the ballooning deficit this year.
“As we have been planning, there’s also some discussions with the Bangko Sentral (BSP) that we would be also tapping some of their facilities, which we have already started with the P300 billion advances that the BSP has provided to the Philippine government,” Ms. De Leon said during an online economic forum on Thursday, referring to the central bank’s purchase of government securities through a repurchase agreement in April.
During a July 28 meeting, the economic team projected a wider budget deficit from 2020 to 2022 as the government plans to spend more to pump-prime the economy while tax collections slump amid the downturn.
Based on the latest estimates by the Development Budget Coordination Committee (DBCC), next year’s revenues were projected at P2.72 trillion — 13.2% of GDP. This is lower than the P2.929 trillion estimated in May.
The budget gap is also seen to swell to 8.5% of GDP next year, up from the previous estimate of 6.6%.
The DBCC slashed its growth projection next year to 6.5-7.5% from 8-9% previously.
Mr. Dominguez also said that the country’s top revenue-generating agencies — the Bureaus of Internal Revenue (BIR) and Customs (BoC) exceeded their collection targets in July.
During the briefing, he said the BIR collected P126.72 billion in July, surpassing its revised P124.14-billion goal by 2.08%.
The BoC also exceeded its target by 5.03% after collecting P50.07 billion in duties and taxes last month. Despite the revenue boost, Customs’ year-to-date collection of P303.132 billion still fell short of its P314.3-billion target.
The economic team earlier cut the BIR’s revenue target for 2020 to P1.744 trillion, down 23% from the P2.205-trillion goal set in March. BoC’s collection target was also trimmed to P542 billion from the original pre-pandemic goal of P730 billion.
“With the performance of revenue collections in July, then we are hopeful that this would continue to be the trend and that would also alleviate the funding requirements for the rest of the year,” Ms. De Leon said.
Gross borrowings of the state hit P1.7 trillion in the first half, exceeding the P1.02 trillion raised for the entire 2019.
For the COVID-19 pandemic response alone, the government has raised $8.131 billion in a mix of loans and grants from external sources. — Beatrice M. Laforga