The Bangko Sentral ng Pilipinas (BSP) has issued its annual advisory for both the public and private sectors such as banks and corporates to submit its foreign borrowing plans to the BSP for review and assessment.
In a statement on Wednesday, July 24, the BSP reminded the government and private sector that they are required to submit these foreign borrowing plans not later than Sept. 30, 2024. These foreign borrowing plans are for the fourth quarter 2024 and for the full-year 2025 period.
The BSP is mandated to review all foreign borrowing plans for external debt management and under the rules of the country’s foreign exchange (FX) transactions and policies.
To be reviewed are both the public and private sector’s medium- and long-term foreign loans or borrowings from non-residents, including offshore issuances of debt instruments, and their plans to issue onshore debt instruments that require settlement in foreign currency.
In every review of the country’s foreign borrowing plans, the BSP also takes into consideration any foreign borrowing limit if they have one, at any given year.
The BSP makes it mandatory to submit foreign borrowing plans to monitor the magnitude and timing of foreign financing requirements which would help them in their capital flows projections and its implications on the economy.
From the submissions of both the private and public sector of their planned foreign loans, the BSP could estimate what it called an “indicative funding requirements” every year.
The BSP also wants to know the purpose – particularly the private sector’s – why they have to borrow from overseas. Banks, foreign parent companies and affiliates, borrow offshore via the issuance of bonds or securities in the international capital markets.
For the first six months of 2024, the BSP’s Monetary Board approved $6.77 billion worth of public sector foreign borrowings. This was lower by 18.33 percent compared to same period last year of $8.29 billion.
For the second quarter period, the BSP approved $3.9 billion government foreign loans, up 42.85 percent from $2.73 billion in the same period in 2023. The amount is also 35.88 percent higher than the first quarter this year’s $2.87 billion government foreign borrowings.
The review and approval process is part of the BSP mandate to assess all public sector or government foreign borrowings under Section 20, Article VII of the 1987 Philippine Constitution.
The Philippines’ total outstanding external debt as of end-March 2024 amounted to $128.692 billion, 8.3 percent higher compared to same period last year of $118.812 billion.
As of end-March, public sector external debt went up by 1.4 percent or $1.1 billion to $78.9 billion from the previous quarter’s $77.8 billion. Its share to total external debt decreased to 61.3 percent from 62.1 percent a quarter ago.
Private sector external debt, on the other hand, increased by 4.7 percent or $2.2 billion to $49.8 billion as of end-March. Its share to total debt stood at 38.7 percent, up from 37.9 percent as of end-December 2023.