Government cuts borrowings to P203 billion in January

MANILA, Philippines — The Marcos administration slashed its borrowings by 45 percent to P203 billion at the onset of the new year in the absence of new global bond offerings..

Data from the Bureau of the Treasury showed that borrowings at the start of 2024 slipped by 45 percent to P203.15 billion from P366.86 billion in obligations in January 2023.

The decline in financing was largely due to the 67 percent dip in borrowings from foreign lenders to just P61.65 billion from P187.56 billion in the comparative period.

It should be noted that it was the same time last year when the government issued a triple-tranche global bond where it raised P163.61 billion, taking advantage of high demand and easing global interest rates.

During the first month of this year, the government did not initiate any global bond issuance as interest rates remained elevated.

Of the P61.65 billion foreign borrowings, 91 percent or P56.3 billion was sourced from multilateral institutions via program loans.

The remaining P5.35 billion was made up of project loans.

Nonetheless, the bulk of total borrowings in January still came from the domestic market.

Local borrowings reached P141.51 billion, 21 percent lower than last year’s P179.3 billion.

These largely came from fixed-rate Treasury bonds at P130 billion and the other P11.51 billion from short-term T-bills.

As of January, the government used up 8.26 percent of the borrowing plan it crafted for the year which is at P2.46 trillion.

It will still adopt a 75:25 borrowing mix in favor of domestic sources.

Such a strategy aims to mitigate foreign exchange risks, take advantage of liquidity in the country’s financial system, and support the development of the local debt and capital markets.