Concerns over foreign exchange (forex) losses might have prompted the Monetary Board (MB) to approve only $1.1 billion in public-sector foreign borrowings in the third quarter, sharply lower than the amount cleared in the same period last year.

According to the Bangko Sentral ng Pilipinas (BSP) report released on Friday, Oct. 24, foreign borrowings approved by the MB in the quarter ending September were 71.1-percent lower than the $3.81 billion cleared in the same period in 2024.

These foreign borrowings, composed of two project loans for social protection, have medium- to long-term maturities, or credits with terms exceeding one year.

Meanwhile, MB-approved foreign loans for the public sector increased by 16.1 percent to $12.28 billion in the first three quarters from $10.58 billion in the same period a year ago. The year-to-date borrowings translate to around ₱720 billion.

Under the law, all foreign loan proposals by the national government (NG), its agencies, and government financial institutions (GFIs), as well as those guaranteed by the NG, must first be approved by the MB, the BSP’s highest policy-making body.

“This is in line with the BSP’s task of ensuring that the country’s foreign debt remains manageable,” the central bank said.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC), said the public sector’s thinner debt pile in the third quarter could mean the government might have learned its “lessons from past crisis periods, as foreign loans could lead to forex losses for those borrowers that are not hedged.”

“Thus, the lower amount of approved foreign loans reflected caution against potential forex losses associated with United States (US) dollar-denominated and other foreign borrowings,” Ricafort said.

This could also “very much reflect the lower share of foreign borrowings in the total borrowing mix of the government,” said Ricafort.

For the year, the government is targeting to source 80 percent of its borrowings domestically and 20 percent externally.