NG gross borrowings plunge in February

The national government’s (NG) gross borrowings plunged by 48.82% in February as domestic issuances declined, the Bureau of the Treasury (BTr) reported.

Data from the BTr showed that total gross borrowings slumped to PHP 339.55 billion in February from PHP 663.42 billion in the same month a year ago.

Month on month, gross borrowings went up by 59.31% from PHP 213.14 billion in January.

Domestic debt dropped by 78.62% to PHP 140.8 billion in February from PHP 658.68 billion in February 2024.

The domestic borrowings in February 2024 included the proceeds from the record-high PHP 584.86 billion raised from retail Treasury bonds.

Domestic debt in February this year was made up of PHP 130 billion in fixed-rate Treasury bonds and P10.8 billion in Treasury bills.

Meanwhile, external debt accounted for the bulk or 58.53% of total gross borrowings.

Gross external borrowings ballooned to PHP 198.75 billion in February from PHP 4.74 billion in the previous year, as the government issued global bonds. Last year’s external borrowings were only composed of new project loans.

This consisted of P191.97 billion in global bonds and PHP 6.79 billion in project loans.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the decline in domestic borrowings was offset by the global bond issuance which raised USD 3.3 billion or P192 billion in late January but settled in February.

The government raised USD 3.3 billion from the issuance of dollar and euro-denominated sustainability bonds. This included USD 1.25 billion from 10-year US bonds, USD 1 billion from 25-year US bonds and one billion euros from 25-year euro bonds.

In the January-to-February period, the NG’s gross debt fell by 36.22% to PHP 552.69 billion from PHP 866.57 billion in the same period last year.

Domestic debt accounted for the bulk or 53.01% of total gross borrowings in the first two months.

However, gross domestic borrowings slumped by 63.38% to PHP 293 billion from PHP 800.19 billion in the same period.

This was composed of PHP 270 billion in fixed-rate Treasury bonds and PHP 23 billion in Treasury bills.

As of end-February, gross external debt surged to PHP 259.69 billion from PHP 66.39 billion a year ago.

These consisted of PHP 191.97 billion in global bonds, PHP 56.29 billion in program loans and PHP 11.44 billion in project loans.

Oikonomia Advisory and Research, Inc. economist Reinielle Matt M. Erece said the decline in gross borrowings signaled an improvement in the government’s fiscal space, showing “that they do not need to borrow as much to finance their spending for this month.”

Mr. Erece said gross borrowings increased month on month after NG’s issuance of global bonds.

For the following months, Mr. Ricafort said lower interest rates from the US Federal Reserve and the Bangko Sentral ng Pilipinas (BSP) would provide “better leeway” for the NG to “hedge its borrowing to finance the budget deficit and in refinancing maturing debt.”

The BSP will meet to review policy on April 10.

The Monetary Board on Feb. 13, unexpectedly kept benchmark rates unchanged at 5.75% amid global trade uncertainty.

“Lower interest rates and stronger peso recently (best in six months) would help reduce financing costs,” he said.

The peso on April 3, closed at a near six-month high of PHP 57.095 per dollar, up 12 centavos from March 27’s finish of PHP 57.215. – Aubrey Rose A. Inosante, Reporter