NG gross borrowings fall in March

The National Government’s (NG) gross borrowings declined in March as external debt dropped by nearly half, data from the Bureau of the Treasury (BTr) showed.

Gross borrowings fell by 12.8% to PHP 207.265 billion in March from PHP 237.602 billion in the same month a year earlier.

BTr data showed that gross external debt slumped by 44.4% to PHP 50.87 billion during the month from PHP 91.557 billion a year ago.

This consisted of PHP 39.137 billion in program loans and PHP 11.733 billion in new project loans.

On the other hand, domestic debt rose by 7.1% to PHP 156.395 billion from PHP 146.045 billion in March 2023. This accounted for over three-fourths or 75.5% of the total gross borrowings during the month.

Broken down, domestic borrowings were composed of PHP 120 billion in fixed-rate Treasury bonds and PHP 36.395 billion in Treasury bills.

In the first quarter, gross borrowings slipped by 12.4% to PHP 830.389 billion from P948.09 billion a year ago.

Gross domestic borrowings stood at PHP 713.132 billion in the January-to-March period, up by 9.2% from PHP 652.986 billion a year ago.

Domestic debt, which accounted for 85.9% of the total borrowings, consisted of PHP 341.412 billion in retail Treasury bonds (RTBs), PHP 310 billion in fixed-rate Treasury bonds and P61.72 billion in Treasury bills.

On the other hand, external gross borrowings plunged by 60.3% to PHP 117.257 billion in the period ending March from PHP 295.104 billion a year ago.

This was made up of PHP 95.435 billion in program loans and PHP 21.822 billion in new project loans.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that the decline in March borrowings may be due to the RTB issuance in February.

“That could have front loaded some of the borrowing requirements for March 2024,” he said in a Viber message.

In February, the government raised a record PHP 584.86 billion from its offering of five-year RTBs.

Mr. Ricafort also noted the first quarter was lower year on year since there were no global bond issuances.

In January 2023, the government raised USD 3 billion from its US dollar bond issuance.

Finance Secretary Ralph G. Recto has said that the Treasury is still finalizing the details of its first global bond offering this year.

Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, said that the drop in gross borrowings is likely an indicator of the NG’s fiscal consolidation efforts.

“However, this may also mean a subdued fiscal stimulus for the period,” he added.

For April, Mr. Ricafort said that the seasonal increase in tax collections would boost the government’s cash position.

“(This) could help improve the fiscal position in terms of narrower budget deficit, at the very least, or could even lead to a possible budget surplus for the month — a consistent pattern seen for many years,” he added.

The deadline for the filing of annual income tax returns was on April 15. The Bureau of Internal Revenue (BIR) is expected to collect about PHP 406 billion during the month.

Separate BTr data showed that the budget deficit narrowed by 6.82% to PHP 195.9 billion in March. For the first quarter, the fiscal gap widened by 0.65% to PHP 272.6 billion.

This year, the budget deficit ceiling is set at PHP 1.48 trillion or equivalent to 5.6% of gross domestic product.

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