Gov’t borrowings hit P26.91 B in Feb

The government borrowed more funds than it paid in February, separate data from the Bureau of the Treasury showed.

Debt payments amounted to P25.22 billion in February, while gross borrowings reached P26.91 billion.

Settlements however grew faster than borrowings. The former was up 3.43 percent, while the latter went down 1.3 percent from the same period a year ago.

The government borrows from local and foreign markets to finance its budget deficit and pay existing debts.

Nicholas Antonio Mapa, economist at Bank of the Philippine Islands, said higher settlements could indicate more funds were used to settle debts than finance budgetary requirements.

The budget deficit – which indicates more funds spent than earned – reached P34.63 billion, up nearly four times from a year ago, but still well-below the P298.6-billion cap for the year.

“That could explain what happened. In the first place, most of their new debts also have low interest and are very cheap so perhaps they were able to pay their interest or did refinancing,” Mapa said in a phone interview.

Debts have scheduled interest payments in a year. Meanwhile, refinancing means the government is borrowing new money to pay for existing debts.

Most of the time, refinancing is done to replace debts with high interest rates with lower interest to lower costs.

In February, debt settlements were composed of P21.28 billion of interest payments and P3.94 billion of principal payments. The former increased 12.6 percent, while the latter decreased 39 percent.

Borrowings, meanwhile, were made of P26.13 billion in domestic credits and P781 million in external ones, data showed.

Local borrowings more than doubled from P12 billion, while their external counterparts dropped 94.9 percent from P15.27 billion.

The government is scheduled to report its fiscal performance for March and the first quarter today.