COVID-19 hikes PH borrowing in April

The unprecedented government emergency spending to cushion economic impact of coronavirus pandemic has driven the level of the Duterte administration’s borrowing in April.

Data from the Bureau of the Treasury showed that gross financing of the national government shot up by nearly sevenfold to ₱262.75 billion last April from only ₱37.92 billion in the same month last year.

More than half of the borrowings, or 65.5 percent, were sourced from domestic creditors through the sale of short- and long-term debt instruments.

Internal borrowings amounted to ₱172.1 billion in April, up 398 percent compared with ₱34.49 billion in the previous year.

Likewise, overseas financing skyrocketed during the month as the government scrambled for money to fund the coronavirus response while revenue collection slowed down during the pandemic.

External financing soared from only ₱3.43 billion last year to ₱90.65 billion in April.

National Treasurer Rosalia V. De Leon said the bulk of the government foreign borrowings were from the Asian Development Bank (ADB) and the World Bank.

The Manila-based multilateral institution’s total loan releases to the government in April reached ₱54.73 billion, while the Washington-based lender disbursed ₱35.34 billon to the country.

Finance Secretary Carlos G. Dominguez III said last month that the national government’s budget deficit, which is being funded by borrowings, would hit around ₱1 trillion this year as spending for coronavirus response continue piling up.

To bridge the gap, Dominguez said the government plans to tap more loans from ADB, World Bank and Asian Infrastructure Investment Bank (AIIB).

But the finance chief, however, rejected proposal, now pending in Congress, seeking for additional stimulus spending for this year, noting this would result in higher debt that would endanger the government’s fiscal health.

“Let me just tell you that this administration has borrowed the most amount of money in any five-month period compared with any administration in the past,” he said.

The Duterte administration’s economic team wants to limit the national government’s budget deficit below 10 percent for the year.

In January to April this year, the national government’s total borrowings amounted to ₱919.43 billion, up by 39 percent compared with ₱661.52 billion in the same period last year.