Gross borrowings fall in August

The National Government (NG) gross borrowings dropped by 6.96% to PHP 124.056 billion in August, the Bureau of the Treasury (BTr) said.     

Data from the BTr showed that gross borrowings in August were lower than PHP 133.338 billion in the same month in 2022.

Month on month, gross borrowings slipped by 5.97% from PHP 131.937 billion in July.

In August, domestic borrowings accounted for almost all or 94.6% of total gross borrowings.

Gross domestic debt declined by 11.09% to PHP 117.374 billion during the month from PHP 132.021 billion a year ago.

Broken down, this was made up of PHP 110.235 billion in fixed-rate Treasury bonds and PHP 7.139 billion in Treasury bills.

Meanwhile, gross external debt grew fivefold to PHP 6.682 billion in August from PHP 1.317 billion in the previous year. External borrowings were entirely composed of new project loans.

In the January-to-August period, the NG’s gross debt jumped by 21.76% to P1.68 trillion from PHP 1.38 trillion in the same period last year.

Domestic debt accounted for the bulk or 76.5% of total gross borrowings in the first eight months. Gross domestic borrowings increased by 23.37% to PHP 1.28 trillion from PHP 1.04 trillion.

This consisted of PHP 904.76 billion in fixed-rate Treasury bonds, P283.763 billion in retail Treasury bonds, and PHP 95.842 billion in Treasury bills.

As of end-August, external debt stood at PHP 394.562 billion, up by 16.81% from PHP 337.794 billion in the same period a year ago.

This was composed of PHP 163.607 billion in global bonds, PHP 145.059 billion in program loans, and PHP 85.869 billion in new project loans.

ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa in a Viber message said that the lower gross borrowings in August was due to “less pressure” to borrow amid normalizing revenue streams.  

“As the economic reopening narrative fundamentally increased, the government tax revenue collections helped narrow the budget deficit and reduced the need for additional borrowings,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

However, Mr. Ricafort noted risk factors such as elevated interest rates could drive up borrowing costs.

The Bangko Sentral ng Pilipinas (BSP) has raised its policy rate by 425 basis points (bps) from May 2022 to March 2023. This brought the key interest rate to a near 16-year high of 6.25%.

BSP Governor Eli M. Remolona, Jr. has given a signal of the possibility of another 25-bp rate hike at its November meeting, which would bring the benchmark rate to 6.5%.

This year, the National Government has set its borrowing program at PHP 2.207 trillion, consisting of PHP 1.654 trillion from domestic sources and PHP 553.5 billion from foreign creditors. — Luisa Maria Jacinta C. Jocson