The national government increases by 25 percent its borrowing plan for June as the debt market braces for more interest rate hikes by the Bangko Sentral ng Pilipinas (BSP) this year.

According to an online advisory released on Thursday, May 26, the Bureau of the Treasury indicated that the national government will sell P75 billion worth of Treasury bills (T-bills) and P175 billion in Treasury bonds (T-bonds) in June 2022.

Next month’s total borrowing plan totaled P250 billion, up by 25 percent compared with P200 billion in May. The Treasury will still hold a weekly auction for T-bills and T-bonds.

The bureau will offer P5 billion worth of each 91-, 182-day and 364-day T-bills every Monday and issue them on June 1, 8, 15, 22 and 29.

Likewise, the agency will issue P35 billion worth of three-, five-, seven-, 10 and another seven-year T-bonds on June 2, 9, 16, 23, and 30, respectively.

The higher domestic borrowing program comes after the Bangko Sentral ng Pilipinas (BSP) raised its key interest rates by 25 basis points to help temper the buildup of inflation expectations and in response to the strong rebound in the first quarter growth.

The new BSP policy rate is 2.25 percent, effective on May 20. The last time the BSP’s Monetary Board raised the benchmark rate was Nov. 15, 2018, also by 25 bps.

In the first three months of the year, the national government has borrowed less as sources of state revenue start to normalize on the back of easing quarantine restrictions.

Based on the Treasury report, the Duterte administration’s total borrowings amounted to P1.082 trillion from January to March, down 21 percent from P1.381 trillion in the same period last year.

While government’s foreign borrowings nearly doubled in the first quarter, its domestic financing was slashed below the trillion level during the period.

According to the Treasury, borrowed money in the local market amounted P849.12 billion at end-March, 35 percent lower compared with P1.302 trillion a year earlier.