Gov’t total loans jump 1,244% in Oct. to P663 B

The Duterte administration’s borrowings increased by over ninefold in October due to Bangko Sentral ng Pilipinas’ (BSP) cash advance to the national government, data from the Bureau of the Treasury showed.

Gross borrowings of the national government in October this year increased by 1,244 percent to P663.17 billion from only P72.74 billion in the same month last year, the treasury reported.

Bulk of the fresh borrowings during the month was the P540 billion short-term loan secured by the government from the BSP to beef up the country’s war chest to fight the COVID-19 pandemic. 

The zero interest central bank loan, which will be repaid on or before December 29 this year, is on to of the government’s regular sale of Treasury bills and bonds to domestic creditors.

In October, the Duterte administration sold P69 billion worth of long-dated IOUs, and P30 billion short-term debt papers.

The government also borrowed P24.17 billion from overseas during the month. Of that amount, program loans reached P19.7 billion, while project loans amounted to P4.21 billion.

Program and projects loans are types of concessional, or low-interest rate, financing secured by the Philippine government from its development partners like the World Bank, Asian Development Bank, among others.

The October borrowings brought the national government’s gross financing in the first 10-months of the year to P3.224 trillion, higher by 233 percent compared with P967.55 billion in the same period last year.

Total domestic borrowings at end-October jumped by 293 percent to P2.649 trillion from P673.8 billion in the same period a year ago, while foreign financing reached P574.43 billion, also higher by 95 percent compared with P293.75 billion last year.

In 2020, President Duterte plans to borrow a record P3 trillion from domestic and external sources, an amount higher by 195-percent compared with P1.01 trillion last year.

National Treasurer Rosalia de Leon said the P3.2 trillion gross borrowings at end-October do not represent the whole-picture of the government’s total financing for 2020 as it also includes those rolled-over debt instruments and BSP loans, which were scheduled to be repaid within this year.

As of October, the government’s fresh debt is around P2.5 trillion to P2.7 trillion, still below the P3 billion borrowing ceiling, de Leon said.

Amid unprecedented borrowing spree of the government for its COVID-19 response, Finance Secretary Carlos G. Dominguez III already indicated that the Duterte administration would not need to further raise its financing program for the year.

As of September 2020, the national government’s outstanding debt stood at P9.368 trillion, higher by 18.5 percent than P7.907 trillion in the previous year.

The government needed to borrow to bridge its widening budget deficit in 2020 due to dwindling revenues brought about by the economic downturn.

The Philippines is in recession this year after its economy slid by 11.5 in the third quarter, 16.9 percent in the second quarter, and 0.7 percent in the first. 

In the first three-quarters of the year, the country’s gross domestic product contracted by 10 percent.