BSP-approved external public sector debt rose in Q3
Fresh public sector foreign borrowings that had been cleared by the Bangko Sentral ng Pilipinas (BSP) posted a double-digit growth in the third quarter mainly due to the recent US dollar bond issuance of the Marcos administration.
Latest data from the BSP showed the Monetary Board (MB), the highest policymaking body of the central bank, greenlighted a total of $3.81 billion in new offshore debts of the government, 36 percent bigger compared to the $2.82 billion that had been approved in the same period last year.
The new foreign financing, in turn, was added to the government’s debt stock that was pegged at P15.55 trillion as of end-August.
Under the 1987 Constitution, prior approval of the BSP is required for all foreign loans to be contracted or guaranteed by the Philippine government.
Similarly, all foreign borrowing proposals by the national government, agencies and state-run financial institutions would have to be submitted for approval-in-principle by the MB before the start of actual negotiations.
These approvals are needed as part of the BSP’s mandate to promote the judicious use of resources and ensure that external debt requirements are at manageable levels.
Explaining the amount it approved in the three months through September, the BSP said bulk of the new external debts during the period came from the global bonds sale of the Marcos administration, which was able to borrow $2.5 billion from foreign creditors.
The amount also consisted of two project loans cumulatively worth $535.97 million. Broken down, the first project loan worth $448.41 million will go to “maritime safety and support” while the other $87.56 million will be used for “agrarian reform”, the BSP said.
Lastly, the MB also approved one program loan amounting to $778.59 million to be spent on “environmental protection and climate resilience.”
The Marcos administration is planning to borrow a total of P2.57 trillion from creditors at home and abroad to bridge its budget deficit this year that is projected to hit P1.5 trillion, or equivalent to 5.6 percent of gross domestic product. Of that planned financing, P646 billion will be sourced offshore.
