Govt borrowings last year inched up 5.08%

The national government’s gross borrowings last year nearly hit the P1-trillion level as it inched up by 5.08 percent to P947.551 billion. In 2017, when the government firmed up its “Build, Build, Build” (BBB) program, gross borrowings hit P901.672 billion. Last year’s gross borrowings was lower than the P986 billion programmed for 2018. Domestic borrowings outpaced foreign borrowings by P341.397 billion, data from the Bureau of the Treasury (BTR) showed. Domestic gross borrowings amounted to P644.474 billion, while borrowings from foreign lenders for the year amounted to P303.077 billion.

Under domestic borrowings, Treasury bills accounted for P179.937 billion, retail Treasury bonds with P121.765 billion, fixed-rate Treasury bonds with P292.772 billion and P50 billion from the Central Bank Board of Liquidators (CBBOL).

For gross borrowings from foreign entities, project loans accounted for P33.957 billion, program loans with P80.422 billion, panda bonds with P11.976 b billion, samurai bonds with P74.040 billion and dollar bonds at P102.682 billion.

For December alone, the government’s gross borrowings amounted to P132.291 billion, which is 44.26 percent lower than the P237.357 billion recorded in the same month in 2017.

Of the total, domestic borrowings in December last year hit P118.676 billion, 49.12-percent lower from the P233.251 billion the BTR recorded in the previous year. December external borrowings amounted to P13.615 billion, which showed a growth of 231.58 percent from P4.106 billion in December 2017.

Dominguez assurance finance Secretary Carlos G. Dominguez iii said that when most of the financing for the BBB program have been accessed in 2022, the country’s debt to China will constitute around 4.5 percent of the total debt, and project debt to Japan will be around 9.5 percent of total debt.

“There is no danger of us being drowned by Chinese debt. We borrow with great prudence, aware that it is the taxpayer who ultimately pays for the debt. We always keep in mind that the money we borrow comes from the taxes dutifully paid by the people of the countries that have continued to generously support us,” Dominguez said at the University of the Philippines Women Lawyers’ Circle Business Conference held last week at a venue in Taguig City.

He explained that the government adopted a hybrid public-private partnership model, wherein they use official development assistance (ODA) instead of waiting for the private sector to raise financing commercially for initial projects.

“The hybrid model enables us to use cheaper money and move more quickly to get the projects started. While we rely on ODA inflows to get the infrastructure program going, we take great care to keep debt service low,” Dominguez said. “it is not true that the infrastructure program is mainly driven by financing from China. as of 2018, our total project debt exposure to China is only 0.66 percent of our total debt exposure. Comparatively, our total project debt to Japan is 9 percent of our total debt exposure.”

Debt-to-GDP ratio

The country’s debt-to-GDP ratio settled at 41.9 percent in 2018 from 68.5 percent in 2005, which shows its downward trajectory, added the chief of the Department of Finance (DOF).

“We continue to prudently manage our obligations, and we are confident that the rapid expansion of the domestic economy will enable us to decrease our debt ratio further to 38.6 percent by 2022,” he said.

Dominguez explained that the economy’s growth of 6.5 percent during the first 10 quarters of the Duterte administration “points to a clear growth momentum,” and that the government “keeps its 7-percent growth target for this year.”

“On the part of the economy, i assure you that we are looking at a very good year after this one,” he added. “We managed to sustain the higher-than-6-percent growth last year because of strong domestic demand and robust investment and capital formation rates.”

The DOF considers public spending on the government’s infrastructure-modernization program as a growth driver, with actual disbursements during the first ten quarters of the Duterte administration reaching P1.64 trillion, which is equivalent to 4 percent of gross domestic product (GDP).

Dominguez said the government has “already exceeded the programmed infrastructure and other capital outlays spending” for the said period.