Gross borrowings hit P2.27 trillion as of end-July – BusinessWorld

GOVERNMENT BORROWINGS increased by 22% in the seven months to July from a year earlier, as the budget deficit continues to widen. 

Data from the Bureau of the Treasury (BTr) showed gross borrowings increased to P2.27 trillion as of end-July, from the P1.857 trillion logged in the same period of 2020.

For July alone, the government borrowed P337.149 billion, 150% higher than the P134.532 billion logged a year earlier.

The government borrows from local and foreign creditors to plug the budget deficit that has ballooned since 2020, as tax collections plunged amid the economic slowdown. Economic managers expect the budget deficit to widen to 9.3% of the gross domestic product this year.

The budget shortfall stood at P121 billion in July.

More than half (53.4%) of the gross borrowings in July came from local sources while the rest came from external sources.

Domestic borrowings in July amounted to P180.36 billion, surging by 170% from the P66.837 billion in July 2020. Local debt during the month was sourced from fixed-rate Treasury bonds (T-bonds) worth P208.86 billion.

External gross borrowings more than doubled to P156.789 billion in July from P67.695 billion a year earlier. This includes P10.617 billion from project loans and P146.172 billion raised from global bonds.

Year to date, gross borrowings accounted for 75.6% of the P3 trillion the government is seeking to raise for 2021.

The P2.27-trillion borrowings consisted of 81% local debt, while the rest were from external sources.

The government raised P1.828 trillion from local lenders in the January to July period, rising by a third from the P1.375 trillion logged a year earlier.

These were made up of P463.322 billion in retail T-bonds, P779.86 billion in fixed-rate T-bonds, and P540 billion in short-term financing from the Bangko Sentral ng Pilipinas.

Excluding P53.108 in billion debt repaid and those that were settled via the Bond Sinking Fund, the government’s net borrowings in the first seven months stood at P1.775 trillion.

Borrowings from external creditors for the first seven months of the year fell by 8.2% to P441.736 billion from P481.152 billion in the same period of 2020.

About P146.172 billion was raised through global bonds in July. In April, the Treasury raised P121.967 billion via euro-denominated bonds and P24.188 billion through Samurai bonds. Meanwhile, project loans stood at P54.327 billion, while P95.082 billion came from program loans.

The BTr repaid P161.534 billion worth of foreign loans from January to July, reducing its net foreign borrowings to P280.202 billion.

This was comprised of P54.327 billion in project loans; P95.082 billion in program loans; P121.967 billion in euro-denominated bonds; P146.172 billion in global bonds; and P24.188 billion in Samurai bonds.

The higher gross borrowings as of end-July was no surprise given the need to support the economy during the crisis, Colegio de San Juan de Letran Graduate School Dean Emmanuel J. Lopez said.

“This is seen coming due to the lingering effect of the pandemic resulting into the shortage of funds to finance the expenditure meant to control the pandemic, not to mention the need to stimulate economic activities,” he said in an e-mail.

Mr. Lopez is hopeful that the higher gross borrowings “will be a good avenue to bring back the growth experienced during the pre-pandemic era.”

The country’s debt stock hit P11.166 trillion as of end-July. — Luz Wendy T. Noble