Gross borrowings up 22% in February

The National Government’s (NG) gross borrowings rose by 22% in February as domestic debt surged, the Bureau of the Treasury (BTr) reported.

Data from the BTr showed that total gross borrowings jumped to PHP 419.973 billion in February from PHP 343.625 billion in the same month a year ago.

Month on month, gross borrowings more than doubled (106.7%) from PHP 203.151 billion in January.

Nearly all of February’s gross borrowings (98.9%) came from domestic sources.

Gross domestic debt climbed by 26.7% to PHP 415.232 billion during the month from PHP 327.641 billion a year earlier.

This consisted of PHP 341.412 billion in retail Treasury bonds (T-bonds), PHP 60 billion in fixed-rate T-bonds, and PHP 13.82 billion in Treasury bills (T-bills).

On the other hand, gross external debt fell by 70% to PHP 4.741 billion in February from PHP 15.984 billion in February 2023. External borrowings during the month were composed entirely of new project loans.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that borrowings in February were significantly higher due to the retail Treasury bond (RTB) issuance.

The government raised a record PHP 584.86 billion from its offering of five-year RTBs in February, exceeding the PHP 400-billion target set by the BTr.

Mr. Ricafort also attributed the rise in borrowings to the wider budget deficit amid high borrowing costs.

Separate data from the BTr showed that the NG’s budget deficit widened by 54.81% to PHP 164.7 billion in February from PHP 106.4 billion a year earlier, driven by a 22.14% surge in state spending.

“This increase in borrowings may be attributed to higher financing needs to support various government programs and initiatives, covering budget deficits, managing local government debt profiles, and implementing subsidy measures due to inflation and El Niño,” Security Bank Corp. Chief Economist Robert Dan J. Roces said in a Viber message.

TWO-MONTH PERIOD
Meanwhile, BTr data showed that gross borrowings declined by 12% to PHP 623.124 billion in the January-February period from PHP 710.488 billion last year.

External borrowings in the first two months of the year plunged by 67% to PHP 66.387 billion from PHP 203.547 billion in the year-ago period. This was composed of PHP 56.298 billion in program loans and PHP 10.089 billion in new project loans.

Domestic debt stood at PHP 556.737 billion, up by 9.8% from PHP 506.941 billion in the same period a year ago.

Broken down, this consisted of PHP 341.412 billion in retail T-bonds, PHP 190 billion in fixed-rate T-bonds and PHP 25.325 billion in T-bills.

For the coming months, Mr. Ricafort said the upcoming global bond offering could add to NG’s borrowings.

The BTr is finalizing the details of the government’s first global bond offering this year, Finance Secretary Ralph G. Recto said earlier. No details have been released.

“However, an important positive offsetting factor would be the seasonal increase in tax revenue collections in April that could help narrow the budget deficit and NG debt,” he added.

Taxpayers have until April 15 (Monday) to file their annual income tax returns with the Bureau of Internal Revenue (BIR). The agency is expected to collect PHP 405.9 billion during the month.

“The expectation of further increases in borrowings this year depends on several factors, including the country’s economic growth, government budget and expenditure plans, market conditions, and debt sustainability concerns,” Mr. Roces added.

The government’s borrowing program is set at PHP 2.46 trillion, with PHP 1.85 trillion to be raised from the domestic market and PHP 606.85 billion from foreign sources, according to the latest Budget of Expenditures and Sources of Financing data. — By Luisa Maria Jacinta C Jocson, Reporter