Borrowings of the Duterte administration inched up in April as the government tapped more foreign creditors to finance its coronavirus response, data from the Bureau of the Treasury showed.
Gross borrowings of the national government increased by 3.5 percent to P271.95 billion in April this year from P262.75 billion in the same month last year.
Based on the Treasury report, the spike in foreign financing pushed up the government’s borrowing activities.
From P90.65 billion a year earlier, offshore borrowings jumped 83 percent to P165.8 billion due to the twin sales of euro- and yen-denominated bonds.
According to the Treasury, total proceeds from the recent 20-year euro bond sale, the country’s largest ever offering in the European debt market, reached P121.97 billion, while the three-year Samurai bonds generated P24.19 billion.
Moreover, the government also borrowed from multilateral institutions in April. Total project and program loans amounted to P9.96 billion and P9.68 billion, respectively.
Meantime, domestic borrowings went down during the month.
Data showed the government borrowed P106.15 billion from local banks, 38 percent lower compared with P172.1 billion in the previous year. Of that amount, P95 billion worth of Treasury bonds and P11.15 billion of Treasury bills were sold.
The Duterte administration has been very active in its borrowing program in recent months to bridge the widening budget deficit amid dwindle tax revenues and higher spending due to prolonged pandemic.
As of end-April, the total borrowings of the national government hit P1.65 trillion, higher by 35 percent compared with P1.22 trillion in the same period last year. The bulk of the borrowing was sourced domestically, amounting to P1.41 trillion. This amount rose by 43 percent from P982.13 billion a year earlier.
The government’s foreign financing in the first four-months of the year, meanwhile, amounted to P245.25 billion, up 3.3 percent compared with P237.33 billion in the previous year.
Earlier, Finance Secretary Carlos G. Dominguez III said the national government will borrow P3 trillion this year. Of that amount, 75 percent of it will be sourced from the domestic market.
But despite heightened financing activities, debt watcher S&P Global still affirmed the Philippines’ investment grade credit rating as the nation’s growth prospects remain strong even with the unprecedented economic shock from the pandemic.
S&P Global maintained the country’s “BBB+” credit score with a “stable” outlook, which the government said “a vote of confidence that the country continues to enjoy favorable medium-term growth prospects despite challenges posed by COVID-19.”
The Philippines’ credit rating with S&P is the highest among its ratings with international debt watchers—the country is rated one notch lower at “BBB” by Fitch Ratings and its equivalent Baa2 by Moody’s Investors Service.