Gross borrowings jump by 77% in May

THE NATIONAL GOVERNMENT’S (NG) gross borrowings surged in May amid a rise in external debt due to the dollar bond issuance, data from the Bureau of the Treasury (BTr) showed.

The NG’s gross borrowings jumped by 76.7% to P259.334 billion in May from P146.783 billion in the same month a year ago.

Month on month, borrowings nearly tripled from P89.202 billion in April. 

This as gross external debt skyrocketed (751%) to P127.613 billion during the month from P14.991 billion a year earlier.

This was composed of P115.247 billion in global bonds and P12.366 billion in new project loans. There were no program loans during the month.

Meanwhile, gross domestic debt slipped by 0.05% to P131.721 billion in May from P131.792 billion in the same month a year ago.

This consisted of P121.721 billion in fixed-rate Treasury bonds and P10 billion in Treasury bills.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that the spike in borrowings was due to the dollar bond issuance during the month.

In May, the government raised $2-billion issuance of the dual-tranche 10- and 25-year fixed-rate dollar bonds, its first global bond sale of the year.

“Higher interest rates and weaker peso exchange rates also increased the debt servicing costs of the NG that required more borrowings,” Mr. Ricafort said.

The Monetary Board has kept its benchmark rate at 6.5%, its highest in over 17 years.  The central bank raised borrowing costs by 450 basis points (bps) from May 2022 to October 2023.

In May, the peso sank to P58-per-dollar level for the first time since November 2022.

For the first five months, the NG’s gross borrowings rose by 16.1% to P1.42 trillion from P1.22 trillion in the same period in 2023.

Gross domestic borrowings jumped by 32.9% to P1.17 trillion as of end-May from P880.905 billion in the year prior.

On the other hand, gross external debt declined by 26.8% to P251.712 billion as of end-May from P343.874 billion.

“Going forward, possible Fed rate cuts in 2024 and 2025 that could be matched locally would help ease the NG’s interest expense,” Mr. Ricafort said.

Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona, Jr. has signaled that the central bank can begin its policy easing cycle by August.

The BSP could cut by up to 25 bps in the third quarter and another 25 bps in the fourth quarter, he said.

This would be ahead of the US Federal Reserve, which is widely expected to begin easing by December.

The government’s borrowing program is set at P2.57 trillion this year. — Luisa Maria Jacinta C. Jocson