Foreign borrowings surged 42x in Feb as gov’t locked in low rates
The Marcos administration borrowed much more from foreign creditors in February, having raised billions of pesos during its foray into the international debt market early into the year, in a bid to lock in the cheapest interest costs possible amid a slow global rate-cutting cycle.
The government borrowed a total of P198.8 billion from offshore sources in February, about 42 times bigger than the P4.7 billion it had raised externally a year ago, according to the latest cash operations report of the Bureau of the Treasury (BTr).
That amount included proceeds from the sale of global bonds and euro bonds worth a total of P192 billion, accounting for 97 percent of the state’s 2025 plan to raise P197.8 billion from foreign debt issuances.
The rest was in the form of a project loan amounting to P6.9 billion. Soft loans like this carry concessional interest rates and better repayment terms for the borrower.
Recall that the Philippines—one of the most active sellers of sovereign bonds in the region—had front-loaded its foreign commercial borrowings in late January amid expectations of a sluggish pace of interest rate cuts abroad.
That said, Finance Secretary Ralph Recto earlier told Bloomberg that the government “got it covered already” when it comes to its offshore financing needs for the year.
In the first two months of 2025, figures showed total gross external borrowings of the government had nearly quadrupled year-on-year to P259.7 billion.
Local debts down
In contrast, local financing of the government declined by 79 percent to P140.8 billion in February. This brought the two-month tally to P293 billion, marking a 63.4-percent slump.
The steep fall in domestic borrowings can be traced to the absence of major fundraising activities at home during the month.
Unlike last year, when it had borrowed P584.9 billion via retail Treasury bonds, the Marcos administration was only able to raise a total of P140.8 billion via weekly, regular offerings of Treasury bonds and Treasury bills this time.
Overall, the combined domestic and external gross borrowings of the national government fell by 49 percent year-on-year to P339.6 billion during the second month of the year.
That sent the two-month total financing to P552.7 billion, declining by 36 percent. So far, this accounted for 22 percent of the Marcos administration’s entire borrowing program of P2.55 trillion for 2025, which was meant to plug a P1.54-trillion budget hole for this year.
Amid global uncertainties that can keep rates elevated and weaken the peso, Recto had said that the plan this year was to borrow more domestically, noting that there was still excess liquidity in the domestic economy looking for viable investment outlets.
