Government raises local borrowing plan in January

Published December 23, 2020, 6:00 AM

by Chino S. Leyco

The Duterte administration has increased its domestic borrowing program for the first month of next year, data from the Bureau of the Treasury revealed.

According to an online advisory, the Treasury indicated that the national government will sell P80 billion worth of Treasury bills (T-bills) and P60 billion in Treasury bonds (T-bonds) in January 2021.

Next month’s total borrowing plan totaled P140 billion, up 17 percent compared with P120 billion in December 2020.

The Treasury will hold a weekly auction for short-dated IOUs and offer longer tenor debt papers on a fortnightly basis.

The bureau will offer P5 billion worth of each 91- and 182-day T-bills as well as P10 billion of 364-day notes every Monday and issue them on January 6, 13, 20 and 27.

Likewise, the agency will issue P30 billion worth of five- and seven-year T-bonds on January 7 and January 21, respectively.

Earlier, Finance Secretary Carlos G. Dominguez III said the national government will borrow P3 trillion next year, the same level as this year’s financing program.

Of the P3 trillion, 75 percent of it will be sourced from the domestic market

In October, the Duterte administration’s borrowings had jumped by over nine-fold due to Bangko Sentral ng Pilipinas’ (BSP) cash advance to the national government.

Gross borrowings of the national government 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.

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.