US dollar banknotes are seen in this photo illustration taken Feb. 12, 2018. — REUTERS

THE PHILIPPINE central bank approved $3.54 billion in external borrowings by the government in the second quarter in order to fund its ongoing pandemic response and major infrastructure projects.   

In a statement, the Bangko Sentral ng Pilipinas (BSP) said approved public sector borrowings in the April to June period were 26% higher than the $2.80-billion loans in the same period of 2021.

Quarter on quarter, the approved foreign loans dropped by 26% from the $4.8-billion greenlit in the first quarter of 2022.   

The BSP said the government borrowings included a Japanese yen-denominated bond issuance amounting to $513.41 million as well as three project loans worth a total of $2.16 billion. It also included three program loans equivalent to $869.72 million.

“These borrowings will fund the National Government’s general financing requirements ($513.41 million), COVID-19 (coronavirus disease 2019) pandemic response and recovery (i.e., vaccine procurement and continuing requirements in light of the pandemic), among others ($869.72 million), bridge projects ($405.99 million), and a railway project ($1.75 billion),” the central bank said.

Under the 1987 Constitution, the Monetary Board is mandated to give its prior approval for any foreign loan agreement entered into by the National Government.   

“The BSP promotes the judicious use of the resources and ensures that external debt requirements are at manageable levels, to support external debt sustainability,” it said.   

As of end-March, the Philippines’ external debt hit a record $109.8 billion, up by 3.1% from the $106.4-billion level as of end-December 2021.

“The rise in the debt level during the first quarter of 2022 was due to net availments of $3.5 billion, mainly by the National Government and private nonbanks,” the BSP said in June.

Public sector external debt rose by $3.4 billion to $67.4 billion as of end-March, from $63.9 billion as of end-December 2021. Around $58.8 billion or 87% were National Government borrowings while the rest were loans of government-owned and -controlled corporations, government financial institutions and the BSP.

On the other hand, private sector debt slipped to $42.4 billion as of end-March, from $42.5 billion as of end-2021.

The Philippines’ debt stock remained largely denominated in US dollar (55.4%).

The government incurred $2.3 billion in loans from official creditors to support its COVID-19 pandemic response programs and infrastructure projects. It also raised $2.3 billion from the issuance of global bonds.

The government borrows from local and foreign sources to plug its budget gap. — Keisha B. Ta-asan