Gov’t borrowing falls amid decline in T-bond issues

GOVERNMENT borrowing fell in the first half after the Bureau of the Treasury (BTr) made fewer awards of long-term debt paper amid rising yields.

The government borrowed a total of P460.86 billion in the first six months , down 8.88% year-on-year.

This is equivalent to 47.42% of the P971.87 billion overall gross borrowing budgeted for this year according to the Budget of Expenditures and Sources of Financing (BESF).

Funds borrowed from foreign sources during the first half grew 11.93% to P155.82 billion, but this was more than offset by the 16.78% drop to P305.04 billion in domestic borrowing.

Treasury bond (T-bond) issues declined 24.63% to P116.69 billion.

The BTr has said that banks seeking higher yields led to partial T-bond awards, amid expectations of policy tightening by the central bank as inflation rose. In the first half, the Bangko Sentral ng Pilipinas raised interest rates by 25 basis points each in May and June as inflation averaged 4.3% in the first half, above its 2-4% target.

Retail Treasury Bond (RTB) acceptances also fell during the period to P121.77 billion, compared with P181.85 billion a year earlier.

On the foreign borrowing side, program loans rose slightly while project loans fell. In March, the Philippines issued its first-ever renminbi-denominated “panda” bonds worth P12.01 billion.

In June, gross borrowings tripled to P159.98 billion from P52.96 billion a year earlier.

This was driven by a 215.69% surge in funds borrowed locally to P154.59 billion, as well as a 35.29% increase to P5.39 billion in loans from overseas.

The government issued P21.09 billion in Treasury bills (T-bills) in June, against P14.94 billion a year earlier, but issued T-bonds worth P11.73 billion, significantly less than the yearearlier P34.03 billion.

It raised P121.77 billion from RTBs that month.