BSP’s Monetary Board approves USD 3.81-B foreign borrowings in Q3

The Monetary Board (MB) approved USD 3.81 billion of public sector foreign borrowings in the third quarter, the Bangko Sentral ng Pilipinas (BSP) said on Tuesday.

Approved public sector foreign borrowings in the July-to-September period jumped by 36% from USD 2.81 billion a year ago, the BSP said in a statement.

Quarter on quarter, it fell by 2.31% from USD 3.9 billion in approved public sector foreign borrowings in the April-to-June period.

The central bank approved a bond issuance worth USD 2.5 billion, two project loans worth a combined USD 535.97 million and a program loan worth USD 778.59 million.

Proceeds from the bond issuance will be used for the National Government’s general budget financing and to fund or refinance assets in line with the Philippines’ Sustainable Finance Framework.

“Meanwhile, the other loans will cover projects on maritime safety/support (USD 448.41 million) and agrarian reform (USD 87.56 million) and a program on economic recovery, environmental protection and climate resilience (USD 778.59 million),” the BSP said.

The 1987 Constitution requires the Monetary Board to approve all foreign loan agreements entered into by the National Government.

The BSP must also approve in principle any foreign borrowing proposals by the National Government, government agencies and government financial institutions before negotiations.

“The Bangko Sentral ng Pilipinas promotes the judicious use of the resources and ensures that external debt requirements are at manageable levels to support external debt sustainability,” the central bank said.

Latest BSP data showed that the country’s external debt service burden went down by 7.6% to USD 7.693 billion at end-July from USD 8.329 billion a year ago. 

The debt service burden refers to the amount of money a country needs to pay back its foreign creditors.

As of the second quarter, the debt service burden as a share of gross domestic product (GDP) stood at 3.1%, slightly lower than 3.6% in 2023.

The country’s total outstanding external debt rose by 8.3% to a record USD 130.18 billion as of end-July.

The country’s total outstanding external debt had risen by 10.4% to a record USD 130.182 billion as of end-June, separate BSP data showed, bringing the external debt-to-GDP ratio to 28.9%.

Latest data from the Bureau of the Treasury (BTr) also showed that the National Government’s outstanding debt had slipped by 0.9% month on month to PHP 15.55 trillion as of end-August.

The National Government’s debt as a share of the GDP stood at 60.9% in the second quarter, from 61% a year ago and 60.1% in the previous quarter.

The government is targeting a 60.6% debt-to-GDP ratio by yearend. This is still slightly above the 60% threshold deemed manageable for developing economies.

It seeks to further bring down the ratio to 56% by 2028. —  Aaron Michael C. Sy