Debts in focus as ₧160-B borrowing eyed

THE Bureau of the Treasury is no longer offering 35-day Treasury bills (Tbills) in September as it once again shifted its gears in a bid to match investors’ appetite for longer tenors.

The Treasury is set to borrow a total of P160 billion from the local debt market next month. This is slightly lower than the P170 billion it programmed in August.

National Treasurer Rosalia V. De Leon told the Businessmirror they removed the 35-day T-bills from their set of offerings next month because they already had a huge Retail Treasury Bond sale.

Asked whether she thinks investors now prefer to park their funds in longer tenors of debt papers, she said: “Yes for yield pick-up but not beyond 10 years.”

According to the schedule released by the Treasury on Thursday, P100 billion is set to be raised through the issuance of 91day, 182-day and 364-day T-bills, while P60 billion in three-year and 10-year Treasury bonds (T-bonds) will be sold during the month.

A volume of P20 billion in 91-day, 182day and 364-day T-bills will be auctioned off August 31 and all the four Mondays of the month.

September program

MEANWHILE, P30 billion in three-year Tbonds will be offered on September 8, while another P30 billion in 10-year T-bonds will be auctioned off on September 22.

The government borrows to finance its spending requirements as well as to cover its budget deficit.

As tax collections are down amid the pandemic, the Development Budget Coordination

Committee (DBCC) is projecting the country’s budget deficit to more than double to 9.6 percent of GDP or P1.815 trillion from only 3.4 percent of GDP or P660.2 billion last year.

The DBCC also expects the country’s debt-to-gdp ratio this year to increase to 53.91 percent of GDP—A level that it has not seen in over a decade—from a record low of 39.6 percent of GDP last year.

Senate seeks explanation

MEANWHILE, senators indicated on Thursday they are setting early hearings on the 2021 proposed budget, where they expect Malacañang officials to explain to lawmakers details of the over P9-trillion debt burden seen to balloon to P10 trillion before the yearend.

This, as senators are poised to tackle early the P4.506-trillion 2021 national budget bill endorsed by the Palace to Congress following the President’s approval of the Executive proposal containing the annual money transmitted to Congress for enacting an enabling law.

Senators have been conducting parallel hearings in recent years even while the House of Representatives conduct theirs, so that once the House sends its approved version to senators, the latter will not take too much time passing theirs.

Asked if senators have set a date to start scrutiny of the 2021 budget bill, Sen. Juan Edgardo Angara, Finance committee chairman, said they are looking to start by next month.

“We are fixing the calendar,” Angara told Businessmirror, adding, “most likely early September.”

President Duterte approved the proposed P4.506-trillion national budget for 2021, the Department of Budget Management (DBM) confirmed on Sunday, and DBM transmitted this to both chambers of Congress earlier than usual.

In a separate radio interview, Sen. Panfilo Lacson signalled the senators’ readiness to start tackling the annual money measure, conducting parallel hearings with the House of Representatives in a bid to ensure the budget bill is passed before Congress adjourns for its traditional Christmas recess. This will avert a reenacted budget by January.

“We will tackle the budget for 2021 soon,” Lacson said, as the budget documents for the 2021 National Expenditure Program were transmitted to Senate President Vicente Sotto III and Speaker Alan Cayetano. Lacson added: “There we will tackle the so-called Budget Expenditure and Sources Financing, including the program for deficit for 2020 and the projected deficit to see if it will match borrowings.”

The senator recalled that during last year’s budget deliberations, he questioned the disparity in data, citing the P200billion deficit and P800-billion borrowings.”

“I recall asking them last year why the projected budget deficit at the time was only P200 billion, but we were planning to borrow P800 billion. Where will we use that?” Lacson asked, citing a simple example: a family has a budget shortfall of P1,000 but decides to borrow P3,000 and then has to pay interest?

Lacson recalled that executive officials invoked “classified information” in declining to explain the glaring disparity, “until,” he said in a mix of English and Filipino, “the explanation was never given.”

The situation today is a different matter, he said. In December the figure being cited was an P8-trillion debt, “likely P7.8 trillion.” But now, he noted, “we have breached P9 trillion and they’re still saying that before yearend, that could climb to P10 trillion. We won’t have to carry this burden. It will be borne by succeeding generations.”