The central bank has approved $3.919 billion in government’s foreign loans in the third quarter, with most of the funds going to the coronavirus disease 2019 (COVID-19) pandemic response and massive infrastructure projects.

The amount of national government foreign borrowings approved was 49% higher than the $2.654 billion in foreign debt greenlit in the same period of 2019, the Bangko Sentral ng Pilipinas (BSP) said in a statement on Friday.

The policy-setting Monetary Board has the mandate to give prior approval for all foreign loans to be contracted or guaranteed by the government under the 1987 Constitution.

Broken down, $1.458 billion in borrowings will be used for infrastructure development while $1.247 billion will fund the government’s efforts to contain the pandemic.

The rest of the borrowings will be utilized for agrarian reform and agriculture development ($770 million), financial inclusion ($417.42 million), and local governance reforms ($26.53 million).

The country’s total external debt stock as a share of the gross domestic product stood at 23.7% as of end-June, rising from the 21.4% as foreign debt increased to support the government’s crisis response.

BSP Governor Benjamin E. Diokno has said the country’s external debt indicators remain at prudent levels.

The government expects to borrow P3 trillion this year from both foreign and local sources. This is seen to plug the budget deficit which is expected to balloon to 9.6% of gross domestic product this year as state revenues decline amid the economic slowdown.

So far, foreign borrowings surged 85% year on year to P509.69 billion in the January to August this year, data from the Bureau of the Treasury showed. — Luz Wendy T. Noble