Gross borrowings fall in September

The National Government’s (NG) gross borrowings declined by 65% in September, reflecting a slowdown in public spending.

The latest data from the Treasury showed that total gross borrowings fell by 64.89% to PHP 128.913 billion in September from PHP 367.183 billion in the same month a year ago.

Month on month, gross borrowings slid by 74.65% from PHP 508.527 billion in August.

Domestic borrowings, which made up 93.51% of the total, slipped by 16.98% to PHP 120.548 billion in September from PHP 145.2 billion in the same month last year.

This was composed of PHP 111.848 billion in fixed-rate Treasury bonds (T-bonds) and PHP 8.7 billion in Treasury bills (T-bills).

External borrowings, which mainly consisted of project loans, plunged by 96.23% to PHP 8.365 billion in September from PHP 221.983 billion in the previous year.

“This (lower gross borrowings) could very much reflect the lower share of foreign borrowings to the total borrowing mix of the government and could also reflect prudence of some private sector borrowers by reducing US dollar-denominated and other foreign borrowings in view of foreign exchange risks involved,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The peso closed at PHP 58.196 per dollar on Sept. 30, down by 35.1 centavos from its PHP 57.845 finish on Dec. 27, 2024.

“(The) lower amount of approved foreign loans reflected that cautiousness vs. potential forex (foreign exchange) losses that entail US dollars and other foreign loans,” Mr. Ricafort said.

Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera said in a Viber message that the lower borrowings reflected slower government spending, particularly on infrastructure, and the government’s “deliberate recalibration of financing strategy” for the fourth quarter.

“While this moderation in borrowings can help ease immediate pressure on yields and debt servicing costs, it also raises two cautions such as if the underlying budget deficit remains large or rises further, the NG may need to ramp up borrowings again potentially at less favorable terms,” Mr. Rivera said.

The NG’s gross borrowings stood at PHP 2.4 trillion in the January-to-September period, up by 4.11% from PHP 2.3 trillion a year ago. This made up 92.11% of the revised PHP 2.6-trillion financing program for 2025.

Domestic debt rose by 9.16% to PHP 1.96 trillion in the period ending September from PHP 1.795 trillion a year ago. This accounted for 92.83% of the PHP 2.04-trillion domestic borrowing program this year.

Broken down, domestic debt was composed of PHP 1.05 trillion in fixed-rate Treasury bonds, PHP 425.61 billion in retail Treasury bonds, PHP 300 billion fixed-rate Treasury notes, and PHP 181.15 billion in T-bills.

As of end-September, gross external debt stood at PHP 434.597 billion, down by 13.84% from PHP 504.447 billion a year ago. This made up 89.03% of the PHP 488.174-billion external borrowing program this year.

Broken down, foreign debt was composed of PHP 191.965 billion in global bonds, PHP 171.307 billion in program loans, and PHP 71.325 billion in project loans.

External borrowings as of end-September were padded by the global bond issuance that raised USD 3.3 billion or PHP 192 billion in late January but settled in February. — Aaron Michael C. Sy