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Government’s foreign loans reach $8 billion at end-June

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THE GOVERNMENT received $8.203 billion in foreign currency (FX) loans in the first half of the year meant for its coronavirus disease 2019 (COVID-19) response, disaster risk management and Marawi’s reconstruction, among others, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said on Friday.

The $8.203 billion was made up of $3.672 billion in commercial borrowings and $4.531 billion in program and project loans disbursed by multilateral lenders, Mr. Diokno said in a Viber message to reporters on Friday.

“We’re providing you this update in the spirit of transparency,” Mr. Diokno, a former Budget secretary, said.

Broken down, the government’s commercial borrowings were made up of $2.348 billion in global bonds and $1.324 billion in euro global bonds.

Meanwhile, for the program loans worth $4.277 billion, $1.512 billion went to the government’s COVID-19 active response and $498.8 million was allocated for emergency coronavirus response and development policy.

The rest of the program loans went to other initiatives such as disaster risk management ($498.8 million); youth-to-school transition ($400 million); promotion of competitiveness ($399 million); local governance reform ($300 million); social welfare development ($299.3 million); emergency assistance for Marawi’s reconstruction ($206.8 million); social protection ($100 million); and social protection support ($60 million).

Mr. Diokno also broke down the $254 million in government project loans which came from the Japan International Cooperation Agency ($98.069 million), International Bank for Reconstruction and Development ($30.84 million), International Fund For Agricultural Development ($11.146 million), the Asian Development Bank ($1.576 million) and other agencies ($113.073 million).

“For the same period, the national government’s FX disbursements amounted to $6.275 billion,” the central bank chief said.

Broken down, $3.305 billion went to debt servicing or principal and interest payments on the government’s commercial borrowings, and program and project loans. Meanwhile, $2.916 billion went to foreign exchange conversion.

Other net disbursements amounted to $54 million, which includes charges and disbursements of grants to other government agencies and net of interest income on the national government’s deposits.

“In sum, net national government receipts amounted to $1.928 billion for the same period ended 30 June 2020,” Mr. Diokno said.

BANKS’ FCDU LOANS

Meanwhile, foreign currency loans of local banks rose in the first quarter amid lower interest rates and an increase in working capital requirements, BSP data released separately on Friday showed.

Outstanding loans by foreign currency deposits units (FCDUs) of banks inched up 1.3% to $18.3 billion as of March from the $18 billion seen at end-2019.

Credit disbursed by FCDUs rose 8.7% year-on-year from the $16.1 billion seen at end-March 2019.

“The growth in loans may be attributed to borrowing firms’ higher working capital requirements, lower interest rates as well as increased investment in plant or equipment,” the central bank said.

FCDUs are central bank-approved bank units that perform transactions involving foreign currencies, mainly by accepting deposits and handing out loans.

The BSP said 79.5% of FCDU loans in the period were medium- to long-term debt, meaning they are payable over a term of more than a year. This is higher than the 75.8% level logged as of March 2019.

Central bank data showed loans to residents, which made up 64.8% of the outstanding loans, went to power generation companies (18%); merchandise and service exporters (13.9%); public utility firms (7.8%); towing, tanker, trucking, forwarding, personal and other industries (6.9%); and producers/manufacturers, including oil companies (5.2%).

Gross disbursements hit $14.3 billion in the first quarter, higher by 7.8% from a year ago, on the back of higher funding requirements of an affiliate of a branch of a foreign bank, the BSP said.

Loan repayments also rose 7.2% which resulted in overall net disbursements.

Meanwhile, FCDU deposit liabilities stood at $43.1 billion as of March, up 4.9% from the end-December 2019 level of $41.1 billion and by 7.8% from the end-March 2019 level of $40 billion.

The BSP said 98% of these deposits continue to be owned by residents, “essentially constituting an additional buffer to the country’s gross international reserves.”

The FCDU loans-to-deposit ratio was at 42.4% as of end-March, lower than the 43.9% as of end-December but slightly higher than the year-ago ratio of 42%. — LWTN





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