Government borrowings up 23% to P27.77 B in September

MANILA, Philippines – Government borrowings rose in September on account of the Aquino administration’s domestic bond exchange that saw it also raise fresh funding requirements, data from the Bureau of the Treasury showed.

Gross borrowings totaled P27.77 billion in September, up 23 percent from previous year’s P22.502 billion. Broken down, local debts increased, while their foreign counterparts plummeted during the period.

Domestic borrowings amounted to P26.764 billion, 56 percent more than the P17.155 billion recorded a year ago. The amount came  solely from the results of the local bond swap in September.

A total of P237 billion worth of 10-year and 25-year bonds were swapped with maturing state obligations. In addition, the government issued fresh 2040 notes purchased by cash, which during then was said to be “approximately P21 billion.”

On the other hand, foreign borrowings dropped 82.9 percent to P914 million from P5.347 billion, figures showed.

The segment was composed of project loans that remained steady from last year at P821 million, and program loans totaling P93 million, down from P4.53 billion.

Project loans are used to finance specific public projects, while program loans are for general development programs which the government can specify.

From January to September, the government borrowed P279.936 billion, slightly down from P280.097 billion last year.

Domestic credits totaled P174.899 billion, down 5.8 percent from a year ago, while their external counterparts went up 11.4 percent to P105.037 billion.

The government borrows from the domestic and foreign markets to finance its deficit and to pay for its existing debts.

As of the third quarter, the budget deficit amounted only to P25.5 billion, way below this year’s cap of P283.7 billion.

In turn, this has allowed the Aquino administration to perform liability management exercises, such as the local bond swap, to replace high-interest, short-termed debts with longer-dated and low-yielding ones.