The Bangko Sentral ng Pilipinas (BSP) has authorized the government to borrow $3.54 billion from foreign creditors in the second quarter of this year.
The new approved public sector foreign borrowing is 26 percent higher than the $2.80 billion borrowing in the second quarter last year. But it is 26 percent lower against the first quarter loan this year of $4.80 billion, the BSP said Monday, July 18.
Public sector borrowings include the following: Japanese-yen denominated bond issuance equivalent to about $513.41 million; three project loans worth $2.16 billion; and three program loans amounting to $869.72 million.
The BSP said that its policy-making body, the Monetary Board, approved these borrowings to fund the national government’s (NG) general financing requirements including a $513.41 million funding for Covid-19 pandemic response and recovery.
A bigger portion of the loan or $869.72 million will fund other public projects, while $405.99 million is alloted for bridge projects and P1.75 billion for a railway project.
To make sure foreign debt level continued to be manageable, the BSP is mandated to review and approve all public sector or government foreign borrowings under Section 20, Article VII of the 1987 Philippine Constitution.
In 2021, the Monetary Board approved $13-billion worth of public sector foreign borrowings. This was lower by 25.9 percent compared to $17.7 billion in 2020 due to lower bond issuances.
Last year’s total public sector foreign borrowings consisted of four bond issuances amounting to $6.2 billion. But the government sold less bonds last year or down by 6.2 percent compared to $6.6 billion raised in 2020.
The Philippines also tapped nine program loans worth $3.9 billion in 2021, and another $3.1 billion was borrowed as 12 project loans. The program loans were also lower by 48.4 percent from $7.5 billion in 2020.
Last year, of the $106.43 billion external debt, the public sector accounted for $63.9 billion, 60 percent of the total. The end-December public sector external debt was 9.99 percent higher from 2020’s $58.12 billion.
The BSP said about $55.4 billion or 86.7 percent of public sector obligations were NG borrowings while the remaining $8.5 billion were loans of government-owned and/or controlled corporations, government financial institutions and the BSP.