THE NATIONAL GOVERNMENT’S (NG) gross borrowings increased to P2.193 trillion in 2023 amid a rise in external debt, the Bureau of the Treasury (BTr) reported.

Data from the BTr showed that total borrowings went up by 1.38% last year from P2.163 trillion in 2022.

This was also slightly below the P2.207-trillion borrowing program for the year.   

Gross external debt jumped by 7.49% to P559.035 billion last year from P520.091 billion in 2022. This was higher than the P553.5-billion targeted borrowings from foreign sources.

External debt was composed of P204.279 billion in program loans, P163.607 billion in global bonds, P135.858 billion in new project loans and P55.291 billion in Islamic certificates.   

In January, the Philippine government raised $3 billion from a US dollar bond issuance and its second global bond offering under the Marcos administration.

It also generated $1 billion from the sale of its maiden offering of Sukuk bonds in December.

Meanwhile, gross domestic debt slipped by 0.6% to P1.634 trillion last year from P1.643 trillion in 2022. This accounted for 74.5% of borrowings during the year.

The BTr was expected to borrow P1.654 trillion from domestic sources last year.

Broken down, it raised P1.18 trillion from fixed-rate Treasury bonds (T-bonds), P252.091 billion from retail T-bonds, P119.531 billion from Treasury bills (T-bills).

It also collected P71.78 billion from retail onshore dollar bonds and P15 billion from tokenized bonds.

The Marcos administration offered its first retail dollar bonds in late September. It also conducted its first-ever sale of tokenized Treasury bonds in November.

In December alone, gross borrowings jumped by 55% to P92.096 billion from P59.434 billion a year ago.

Domestic borrowings resulted in a net redemption of P6.186 billion versus the P32.956-billion debt in the same month in 2022.

The BTr raised P20 billion from fixed-rate T-bonds while T-bills stood at a net redemption of P26.186 billion.

On the other hand, external debt skyrocketed (271.2%) to P98.282 billion in December from P26.478 billion.

This consisted of P26.285 billion in new project loans, P16.706 billion in program loans, and the P55.291 billion raised from the Sukuk offering.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that the single-digit growth in borrowings may be due to the narrower budget deficit.

The NG’s fiscal deficit narrowed by 6.32% to P1.51 trillion in 2023 from P1.61 trillion in the year earlier.

This brought the deficit-to-gross domestic product (GDP) ratio to -6.2% at the end of the year, a tad higher than the -6.1% government target but lower than the -7.3% ratio recorded at end-2022.

The budget deficit ceiling is set at P1.39 trillion this year, or 5.1% of GDP.

“Low growth in borrowings would bode well to temper the growth in the outstanding National Government debt stock and would help bring down the debt-to-GDP ratio to below the international threshold of 60%,” Mr. Ricafort added.

The debt-to-GDP ratio stood at 60.2% at the end of 2023. This was lower than 60.9% at end-2022 and the 61.2% target set by the government.

Mr. Ricafort said that possible policy easing in the middle of the year could also reduce borrowing costs.

“Possible Fed rate cuts later this year that could be matched locally could somewhat help ease debt servicing costs and overall borrowings,” he added.

The Federal Reserve raised its policy rate by 525 basis points (bps) to 5.25-5.5% from March 2022 to July 2023.

Analysts anticipate that once the Fed begins cutting rates, the Bangko Sentral ng Pilipinas (BSP) will soon follow.

From May 2022 to October 2023, the Monetary Board raised borrowing costs by 450 bps, bringing the benchmark rate to 6.5%.

The government’s borrowing program for this year is set at P2.46 trillion, with P1.85 trillion to be raised from the domestic market and P606.85 billion from foreign sources.

In February, the government raised P584.86 billion from its offering of five-year retail Treasury bonds. — Luisa Maria Jacinta C. Jocson