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Covid borrowings push govt debt to exceed P9T

By Mayvelin U. Caraballo, TMT/The Manila Times

(Photos from Alvin I. Dacanay and the Bureau of the Treasury Facebook page)

The government’s outstanding debt soared anew to breach the P9-trillion mark at the end of last month on the back of higher domestic and foreign borrowings to fund its coronavirus disease 2019 (Covid-19) pandemic programs, according to the Bureau of the Treasury (BTr).

Data from the Treasury bureau showed on Wednesday that the actual P9.05 trillion in government debt as of end-June was up by 1.8 percent or P163 billion from the P8.89 trillion in May.

Of the total, 32 percent was generated from foreign creditors and 68 percent was raised locally.

Domestic obligations reached P6.19 trillion, 2.6 percent higher than the end-May figure of P6.03 trillion, while foreign debt grew by 0.3 percent to P2.86 trillion.

Outstanding debt last year reached P7.86 trillion, of which P5.29 trillion was local and P2.57 trillion was foreign.

The Treasury attributed the bigger local obligations to the “net issuance of domestic government securities.“

Of the new issuances, P676.85 billion were in Treasury bills, P387.86 billion in Treasury bonds and P310.77 billion in retail Treasury bonds issued in February.

These also include the P300 billion in short-term borrowing from the Bangko Sentral ng Pilipinas through a repurchase agreement. Gross maturities reached P612.63 billion.
The bureau traced the expanded foreign debt to “net availment of external loans [amounting] to P48.81 billion, which was offset by P41.50 billion, mainly due to local currency appreciation.”

The government’s external financing posted an inflow of P413.46 billion in the first half of 2020 vis-a-vis the debt repayment of P113.46 billion.

For the period, project loan availment reached P11.09 billion, while program loans hit P216.30 billion, including P53.51 billion in concessional loans from multilateral creditors in funding “geared toward fighting Covid-19.”

Offshore bond issuances amounted to P186.06 billion.

A foreign exchange rate of P49.79 to the dollar was used for the latest data, compared with May’s P50.58:$1. The exchange rate used a year earlier was P51.23:$1.

Meanwhile, government-guaranteed obligations plunged by 1.3 percent or P5.86 billion to P460 billion in June, 5.5 percent lower than the previous year’s figure.

“The lower level of guarantees was due to the net redemption of local guarantees amounting to P3.05 billion and currency adjustments, which reduced the value of external guarantees by P3.79 billion,” the BTr said, adding that external guarantee availment added P970 million to the total.

The latest debt data came as the Department of Finance quoted a World Bank official as saying the Duterte administration’s prudent fiscal management strategy has positioned the Philippines as among the countries “in good shape” to meet the challenges spawned by the pandemic and bounce back from this global health crisis.

“I think the prudent fiscal management of the past few years has really positioned the country to be among the countries that are really at the forefront in terms of capacity to respond on the fiscal side,” said Ndiame Diop, the new country director of the World Bank for Brunei Darussalam, Malaysia, the Philippines and Thailand, during a recent virtual meeting with Finance Secretary Carlos Dominguez 3rd and members of the Duterte administration’s Build, Build, Build infrastructure team.


Source: https://www.manilatimes.net/2020/07/30/business/business-top/covid-borrowings-push-govt-debt-to-exceed-p9t/747891/

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