Gov’t borrowings down 33%

MANILA, Philippines - Government borrowings in the first five months of the year declined by 32.5 percent aided largely by improving revenue collections and the drop in maturing obligations the Aquino administration had to pay.

 Data from the Department of Finance showed that in January to May, the government borrowed P137.06 billion here and abroad to help fund state projects and programs and pay maturing obligations.  The amount was less than the P203.08 billion borrowings made in the same period last year.

Of the total borrowings, P80.5 billion was secured locally mainly through the sale of treasury bonds (P118.94 billion).  The domestic borrowings were 58.7 percent lower than the P195.11 billion recorded a year ago.

Foreign borrowings,  which comprise loans from development lending institutions, amounted to P56.56 billion or a seven-fold increase from the year earlier figure of P7.97 billion.

Of the P56.56 billion,  P28.67 billion was in the form of global bonds, P16.03 billion in program loans and P11.87 billion in project loans.

In May alone, borrowings by the government reached P21.18 billion, down 21 percent from P26.77 billion in May 2013.  Domestic borrowings accounted for P19.9 billion, 20.14 percent lower than the P24.92 billion registered in the same month a year ago.

The remaining P1.28 billion came from foreign lenders.  The amount was 30.8 percent less than the P1.85 billion borrowed the previous year.

The government borrows funds from both the international and domestic markets to augment the shortfall of domestic revenues that fund its various programs.

 The decline in external borrowings is in line with the government’s liability management program, aimed at boosting the country’s peso portfolio while at the same time reducing the foreign currency component of its debt.

Since he assumed office in 2010, President Aquino has stepped up efforts to reduce the government’s borrowing cost, lengthen the maturities of its outstanding debt, and reduce the bunching up of maturities to help cushion the economy from fluctuating foreign exchange rates.

The government’s debt as a proportion of the country’s total economic output fell 2.3 basis points to 49.2 percent last year from 51.5 percent a year earlier.  This was in line with the Aquino administration’s goal of paring down the ratio to below 45 percent by 2016 or when President Aquino steps down from office.

The debt-to-GDP ratio, one of the key indicators closely watched by major international credit rating agencies, is a measure of the government’s capacity to settle its obligations.