National government gross borrowings fall in June

The National Government’s (NG) gross borrowings declined by 11% year on year in June as external debt dropped, the Bureau of the Treasury (BTr) reported.

The latest data from the BTr showed that gross borrowings in June fell to PHP 148.18 billion from PHP 166.49 billion in the same month a year ago.

Gross external debt in June slumped by 30.43% to PHP 15.7 billion from PHP 22.57 billion a year ago, BTr said.

This consisted of PHP 5.06 billion in program loans and PHP 10.64 billion in new project loans.

On the other hand, domestic debt, which accounted for 89.4% of total borrowings, declined by 7.95% to PHP 132.48 billion in June from PHP 143.92 billion a year prior.

Gross domestic borrowings included PHP 110.23 billion in fixed-rate Treasury bonds and PHP 22.25 billion in Treasury bills.

In the first half of the year, gross borrowings rose by 12.89% to PHP 1.57 trillion from PHP 1.39 trillion in the same period in 2023.

Gross domestic borrowings stood at PHP 1.3 trillion in the January-to-June period, up by 27.16% from PHP 1.02 trillion a year ago.

Domestic debt in the first half of the year consisted of PHP 584.86 billion in retail Treasury bonds, PHP 609.21 billion in fixed-rate Treasury bonds, and PHP 109.07 billion in Treasury bills.

On the other hand, external gross borrowings dropped by 27.02% to PHP 267.41 billion in the period ending June from PHP 366.44 billion a year ago.

This was made up of PHP 100.5 billion in program loans, PHP 51.67 billion in new project loans, and PHP 115.25 billion in global bonds.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the government may not have needed to boost borrowings in June because of higher dividends from government-owned and -controlled corporations (GOCCs).

“More dividends from GOCCs remitted to the National Government (NG) would have helped reduce the need for the NG to borrow to be able to finance the budget deficit,” he said in a Facebook Messenger chat.

GOCCs have remitted PHP 92.15 billion in dividends to the NG as of end-June, the BTr said.

In April, the Department of Finance raised the mandatory dividend remittances of GOCCs to 75% of their annual net earnings in 2023 from 50% previously.

The government may also be waiting for the Philippine and US central banks to ease monetary policy before it could borrow more, Mr. Ricafort said.

“Market expectations of lower Fed and local interest rates could have also provided the NG some leeway to wait for interest rates/borrowing costs to further go down to be able to save on financing costs/debt servicing costs,” he said.

The US Federal Reserve kept its key policy rate at the 5.25-5.5% range last week, but could start easing by September amid its weakening job market.

On the other hand, the Bangko Sentral ng Pilipinas earlier signaled a potential 25-basis-point cut at its Aug. 15 meeting.

The NG’s borrowing plan for this year is set at P2.57 trillion, of which 75% will come from domestic sources and 25% from foreign sources. — B.M.D.Cruz