Gov’t borrowing sharply higher after Samurai bond issue

GOVERNMENT borrowing more than doubled in August after tapping the yen bond market, the Bureau of the Treasury (BTr) said.

The government borrowed a total of P134.05 billion in August, up 118.64% from a year earlier.

Foreign-sourced debt grew fivefold to P75.85 billion, accounting for 56.58% of the overall borrowing portfolio for the month.

On Aug. 8 the government raised P74.04 billion in multi-tranche yen-denominated securities known as “Samurai bonds,” its first such issuance in eight years.

The government also borrowed P1.81 billion in program loans that month.

On the domestic front, the government borrowed a total of P58.20 billion in August, up about a fourth from a year earlier, reflecting the increase in Treasury bill issuance to P28.20 billion from P17.06 billion year earlier, while issues of longer-dated Treasury bonds were unchanged at P30 billion.

The government borrows funds to pay for public projects and programs beyond its ability to finance from the budget, after embarking on an aggressive spending program largely focused on infrastructure.

The government hopes to maintain a budget deficit of 3% of gross domestic product, a rule of thumb widely deemed to represent prudent deficit-spending levels.

In the eight months to August, overall gross borrowing rose 9.98% to P639.35 billion.

This is equivalent to 71.98% of the P888.23 billion programmed for borrowing this year.

Of the total, P254.75 billion was sourced from foreign lenders, up 64.74%, and accounting for 39.84% of the loan portfolio.

On the other hand, the government borrowed P384.56 billion from domestic creditors, down 9.86% from a year earlier. —