Government borrowings drop 61.2%

By Bettina Faye V. Roc | Source: BusinessWorld Online

STATE BORROWINGS dropped by more than half year-on-year in the first quarter as the government continued to trim down its external debt, data from the Bureau of the Treasury showed.

The government borrowed a total of P126.189 billion in the first three months, 61.2% less than the P325.245 billion recorded in the same period last year.

Majority of the debt incurred in the quarter was sourced from local creditors, as domestic borrowings comprised P122.959 billion or 97.44% of the period’s debt. This total was 49.22% lower than the P242.155 billion in domestic debt recorded from January to March 2012.

Broken down, the government floated P14.79 billion in Treasury bills, while fixed rate Treasury bonds also contributed P108.169 billion.

External borrowings, meanwhile, totaled only P3.23 billion in the first quarter, dropping by 96.11% from last year’s P83.09 billion. Of this amount, P2.733 billion came from project loans, while the remaining P497 million were sourced from program loans.

For March alone, the government borrowed a total of P46.346 billion, also down by 75.57% from the P189.731 billion borrowed in the same month last year. External borrowings in the month amounted to P1.027 billion, 36.95% less than the P1.629 billion in March 2012. Of this, P711 million come from project loans while the remaining P316 million came from program loans.

Domestic borrowings in March likewise dropped by 75.9% to P45.319 billion from last year’s P188.102 billion.

The decline was primarily due to the government’s issuance of P179.796 billion in retail Treasury bonds in the March last year, which was not done this year, Treasury data showed.

Of the local borrowings in the month, the government raised P41.719 billion through fixed-rate Treasury bonds and P3.6 billion through Treasury bills.

The government is looking to source most of its funding needs locally this year as part of its liability management strategy.

According to the 2013 National Budget, the government has programmed P757.719-billion in gross borrowings this year, with P567.958 billion of this to be sourced locally and the remaining P189.761 billion from external creditors.

In 2012, the government borrowed a total of P955.147 billion, up by 70.86% from the P559.017 billion recorded the year before.

Domestic borrowings last year amounted to P798.527 billion, while external borrowings totaled P156.62 billion. The country borrows from domestic and external markets to fund its fiscal deficit, which hit P242.8 billion last year. The government aims to trim this year’s deficit to P238 billion.
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