Foreign borrowings of PH gov’t eased in Q1

The Philippine government's foreign borrowings eased in the first quarter of 2021, according to data from the Bureau of Treasury.

Total borrowings from abroad amounted to P94.4 billion during the period, lower than the P98.3 billion registered a year ago. The decline was attributed to the government’s continued focus on domestic sources of financing.

Of the total amount borrowed, P50.5 billion came from multilateral lenders such as the Asian Development Bank and World Bank, while P43.9 billion was sourced from bilateral lenders like Japan International Cooperation Agency and China Export-Import Bank.

In terms of currency composition, US dollar-denominated debt accounted for P62.2 billion or 65.7 percent of total foreign borrowings, followed by Japanese yen at P24.2 billion or 25.6 percent, and euro at P8 billion or 8.5 percent.

The government also tapped other sources of funding such as global bonds and syndicated loans, which amounted to P19.2 billion and P11.1 billion, respectively.

The Department of Finance (DOF) said that the government was able to raise funds at more favorable terms due to its strong macroeconomic fundamentals and prudent fiscal management. The DOF noted that the average interest rate on foreign borrowings declined to 2.6 percent in Q1 2021, compared with 3 percent a year earlier.

The government is expected to continue tapping both local and foreign sources of financing in order to fund its ambitious infrastructure program and other priority projects under the Build Build Build program. It is also looking into issuing pandemic response bonds to further augment its resources for COVID-19 related initiatives.