MANILA, Philippines - Assistance from multilateral lender Asian Development Bank (ADB) pushed government borrowings in October to a level more than double from last year.
According to data from the Bureau of the Treasury, gross borrowings reached P33.768 billion in October, almost twice the P16.920 billion recorded a year ago.
Broken down, domestic credits totaled P14.880 billion, while their external counterparts amounted to P18.888 billion. The former dipped 7.23 percent, but the latter surged from just P880 million last year.
The government borrows from the local and foreign markets to bridge its budget deficit and pay existing debts using new liabilities with lower interest and long payment terms.
In October, a program loan from the ADB called Increasing Competitiveness for Inclusive Growth Subprogram 2 boosted foreign borrowings by P16.412 billion. The item was not included in the 2014 borrowing breakdown.
Another ADB loan – Social Protection Support Project – contributed P616 million. Project loans in the form of goods and services totaled P1.611 billion during the same period, figures showed.
Program loans allocate funding for general government development programs and gives flexibility to borrower to allot them to specific undertakings. Project loans are more designated allocations.
Additionally, the government also borrowed P2.904 billion – up P400 million – to settle principal payments for existing debts.
On the domestic front, Treasury bond issuances plummeted 46 percent to P16.22 billion. A year ago, net T-bond floatations reached P30.04 billion.
Shorter-termed Treasury bills, on the other hand, posted a net of P1.340 billion, indicating more T-bills were paid than issued in the review month, BTr figures showed.
T-bonds and T-bills are instruments used by the government to borrow funds from investors. Each instrument have face value, interest rate and maturity date indications.
T-bonds have naturally longer payments terms than T-bills which are only payable up to a maximum of one year.
From January to October, the national government already borrowed P313.704 billion, 5.62-percent up from last year.
The government programs each year its financing requirements based on other fiscal targets such as revenue collections and the budget deficit.