Gov’t plans to borrow 11.19 trillion in 2019

The national government has set for the first time its borrowing program for next year at R1-trillion level to bridge the expected higher budget gap, the Bureau of the Treasury said yesterday.

National Treasurer Rosalia V. de Leon said that the government is planning to borrow R1.19 trillion next year from the domestic and foreign markets, up by 19 percent compared with R996 billion this year.

“As the economic managers earlier said, we will be borrowing 75 percent from the domestic market, and 25 percent from foreign (sources),” De Leon said in a phone interview.

In nominal terms, the government will secure R891.7 billion from the local debt market, while R297.2 billion from the overseas financial institutions.

“We have yet set the commercial and official development assistance (ODA) composition for 2019,” the treasurer said.

Pesident Rodrigo R. Duterte’s economic team has committed to mobilize up to R8 trillion during their administration to underwrite the government’s ambitious infrastructure buildup program.

Finance Secretary Carlos G. Dominguez III said he is confident the economy will grow by at least 7.0 percent over the medium term on the back of the government’s “golden age of infrastructure” under the “Build, Build, Build” program.

For this reason, the Development Budget Coordination Committee (DBCC) raised the government’s fiscal deficit ceiling for 2019 from 3.0 percent of Gross Domestic Product (GDP) to 3.2 percent.

Likewise, the economic team noted that the government is on its way to exceeding its outstanding debt program this year, breaching the seven trillion mark, on the back of the ambitious infrastructure plan and the stronger US dollar.

The inter-agency body expects the national government’s total debt stock could reach R7.416 trillion this year, or 6.0 percent more than the R6.994-trillion target.

Under the 2018 Budget of Expenditures and Sources of Financing (BESF), the Congress approved that local debt would amount R4.652 trillion this year, but the DBCC assessed the government could overshoot that ceiling by 2.7 percent to R4.782 trillion.

As of end-May this year, the government debt obligations in the domestic market already stood at R4.424 trillion, shy by only R228 billion to surpass this year’s target approved by Congress, data from the Bureau of the Treasury showed.

The Duterte administration’s economic managers also adjusted upward its target for the debt in the offshore markets.

Based on the DBCC data obtained by Manila Bulletin, the government could end 2018 with total foreign debt of R2.634 trillion, also higher by 12 percent compared with the target of R2.342 trillion under the BESF.

The double-digit upward adjustment in foreign denominated debt is attributable to depreciation of the local currency. The DBCC originally set the peso would average R51 to a dollar this year, but the actual exchange rate is now at the R53 level.

At end-May, the national government’s outstanding foreign debt was at R2.408 trillion, already exceeded this year’s original target by R66 billion, data from the Treasury revealed.

Total debt obligations of the national government in the local and foreign markets stood at R6.833 trillion as of May, 2018.

The DBCC’s new debt program is equivalent 42.2 percent of the country’s economy, as measured by the country’s gross domestic product, or slightly higher compared with 42.1 percent actual ratio registered in 2017.