Amid increased NG borrowings
Amid the increased foreign borrowings mounted by the government since the onset of the COVID-19 pandemic in February, the National Government recorded a net foreign exchange inflow of just $1.928 billion as of end of June.
The National Government’s (NG) total foreign exchange (FX) inflows amounted to $8.203 billion as of end-June while disbursements reached $6.275 billion, according to Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno.
Government commercial borrowings accounted for most of the FX inflows at $3.672 billion, while program loans totaled $4.277 billion and project loans were $254 million, based on numbers provided by Diokno, who said the update is “in the spirit of transparency.”
Diokno presented numbers that showed proceeds of the NG FX loans, that funding for COVID-19-related projects came from program loans. Of the total $4.277 billion, $2.013 billion were for anti-pandemic programs by the government, of which $1.514 billion were for COVID-19 response and $498.8 million were for other emergency response and development policy to fight the health crisis.
The NG program loans were also used as: $498.8 million for the Philippine third disaster risk management; $460 million for social protection support; $400 million for facilitating youth-to-school transition; $399 million for promoting competitiveness; $300 million for local governance reform; $299.3 million for social welfare development; and $100 million for social protection projects.
The country’s debt servicing or the payments of principal and interest on NG borrowings, program and project loans, accounted for most of disbursements during the period at $3.305 billion.
Another $2.916 billion was computed as FX conversion as of end-June and $54 million as other net disbursements. FX conversion are “amounts withdrawn for conversion to pesos with the NG’s other counter parties” while other net disbursements include charges and disbursements of grants to other government agencies, net of interest income on the national government’s deposit, said Diokno. “In sum, net NG receipts amounted to $1.928 billion (as of June 30, 2020).”
The government’s $3.672 billion commercial borrowings were broken down as ROP global bond amounting to $2.348 billion and $1.324 billion 2020 Euro global bond.
As for project loans for the first six months, the highest came from the Japan International Cooperation Agency with $98.069 million, followed by the World Bank’s International Bank for Reconstruction and Development with $30.840 million. The United Nation’s International Fund for Agricultural Development also provided $11.146 million as project loans while the Asian Development Bank has $1.576 million.
Other project loans totaled $113.073 million.
Diokno said the local economy has survived economic crises through the years, political changes, and natural calamities. “Still, the current COVID-19 pandemic is a crisis like no other. This pandemic has morphed into a full-blown global economic crisis. Yet, the Philippines has had strong economic fundamentals such as robust growth, good fiscal performance and strong external and financial sector positions—which provided relative stability in the face of the COVID-19 pandemic.” The Philippines continue to enjoy positive credit rating and could borrow funding from the international market at affordable costs. “International rating agencies affirm that the Philippines is likely to come out of the pandemic with little economic damage,” said Diokno.