NG April borrowings rise 7-fold to P262.7B

GROSS borrowings of the national government in April grew nearly sevenfold to P262.747 billion as the state borrowed more from both domestic and foreign sources to finance the government’s response to the Covid-19 pandemic.

This was up by 592.84 percent from only P37.923 billion in the same month last year, latest data from the Bureau of the Treasury showed.

Gross domestic borrowings for the month grew almost fivefold to P172.1 billion from just P34.493 billion a year ago.

Broken down, the state borrowed P84.070 billion from the local debt market through issuing fixed rate treasury bonds and P88.030 billion via Treasury bills.

On the other hand, gross foreign borrowings in April increased 26-fold to P90.647 billion from P3.430 billion in April last year.

Program loans worth P90.068 billion comprised 99.36 percent of the gross external borrowings for the month. Meanwhile, project loans amounted to P579 million.

National Treasurer Rosalia V. de Leon told reporters that the program loans include two from the Asian Development Bank (ADB) and two from the World Bank.

The Manila-based ADB extended a P50.781-billion loan to the Philippines for the country’s Covid-19 Active Response and Expenditure Support (Cares) program and P3.949 billion in emergency assistance for the reconstruction and development of Marawi.

For its part, Washington-based World Bank also extended P25.231 billion for the country’s Cares program and P10.107 billion for the social welfare development and reform project.

With the nearly sevenfold increase in April, gross borrowings by the national government for the first four months of the year soared by nearly 40 percent to P919.465 billion from P661.521 billion in 2019.

Combined gross borrowings from both domestic and foreign sources from January to April this year showed a 38.99-percent increase from last year.

The bulk or 74.19 percent of the gross borrowings as of end-April was sourced from local sources and the balance of 25.81 percent from foreign ones.

Gross domestic borrowings for the four-month period rose by 29.9 percent to P682.132 billion from P525.108 billion a year ago while gross foreign borrowings jumped by 73.98 percent toP237.333 billion from last year’s P136.413 billion.

The government borrows to meet its spending requirements and to finance its budget deficit.

The Cabinet-level Development Budget Coordination Committee (DBCC) expects a wider budget deficit this year at 8.4 percent of GDP or equivalent to P1.613 trillion.

In 2019, the country’s budget deficit was at 660.2 billion or 3.4 percent of GDP.

The country’s budget deficit is also projected to be at 6.6 percent of GDP or 1.429 trillion for 2021 and 5 percent of GDP or P1.181 trillion for 2022.

The country’s debt-to-GDP ratio is also seen to increase to 49.8 percent this year from 39.6 percent last year.

For 2021 and 2022, the DBCC sees an even higher debt-to-GDP ratio of 51.5 percent and 52.3 percent,  respectively.

Despite the projected increase in the country’s debt-to-GDP ratio, economic managers had said this is still far lower than the most recent peak of 71.6 percent in 2004.

A budget deficit occurs when expenditures exceed revenues, while debt-to-GDP ratio is used to gauge a country’s ability to pay off its debt.

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