Gov’t curbed borrowings in Q1 as it shunned offshore debt

Lack of major offshore fundraising activity trimmed the Marcos administration’s gross borrowings in the first quarter, data from the Bureau of the Treasury (BTr) showed.

The government raised P830.4 billion in gross financing in the first three months of 2024, 12.4-percent lower compared with a year ago, figures from the latest cash operations report of the BTr showed.

In March alone, total new financing fell by 12.7 percent to P207.3 billion.

Those fresh borrowings were used to plug the government’s budget hole that amounted to P272.6 billion in the January to March period.

Gross borrowings fell after a decline in foreign liabilities had offset an increase in new local debts.

Broken down, gross external financing totaled P50.9 billion in March, down by 44.4 percent compared with a year ago when the government had incurred hefty program loans amounting to P87.5 billion.

This brought the first quarter foreign borrowings to P117.3 billion, plummeting by 60.3 percent due to absence of new offshore debt sales during the period, unlike last year when the government had raised P163.6 billion via multi-tranche global bonds.

Meanwhile, the government borrowed P156.4 billion from domestic creditors in March, up by 7.1 percent.

This pushed the total local financing in the first quarter to P713.1 billion, larger by 9.2 percent. The Marcos administration raked in bigger proceeds from its sale of Retail Treasury Bonds last February compared with the amount it had raised from the same kind of offering in early 2023.

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Based on latest figures, the Marcos administration is planning to borrow a total of P2.46 trillion from creditors at home and abroad in 2024 to help bridge its budget deficit, which is projected to hit P1.5 trillion this year.

Finance Secretary Ralph Recto said the government would remain “prudent” in its debt management by continuing to adopt a 75:25 borrowing mix in favor of domestic sources. That means that the borrowing program this year will be composed of local debts worth P1.85 trillion and foreign financing amounting to P606.85 billion.

Such a strategy, Recto explained, would “mitigate foreign exchange risks, take advantage of the abundant liquidity in the country’s financial system and support the development of the local debt and capital markets.”

To diversify the state’s funding sources, Recto said the BTr is looking at various global bond markets, with a “potential curtain-raiser offering” in the first semester of the year.