Philippine Daily Inquirer
10:01 pm | Tuesday, June 4th, 2013
Confident of its ability to generate higher revenues and fund more of its expenditure requirements this year, the government borrowed significantly less from foreign and local creditors in the first four months.
Data from the Department of Finance showed that in January to April, the government borrowed P176.3 billion here and abroad to help fund state projects and programs and to pay maturing obligations. Although still significant, the amount represented a nearly 50-percent drop from P347.59 billion in borrowings registered in the same period last year.
Finance officials said the trend of declining borrowings was likely to be sustained throughout this year, when the government intended to post a narrower budget deficit to show fiscal discipline and manifest improving creditworthiness before the international financial community.
Of the total borrowings in the first four months of this year, P170.19 billion were sourced locally, mainly through the sale of treasury bills and bonds. The domestic borrowings were 36-percent lower than the P263.88 billion registered in the same period last year.
Foreign borrowings, done largely by tapping loans from development lending institutions, accounted for P6.12 billion, down by 93 percent from P83.71 billion in the same period last year.
The bigger share of domestic borrowings followed pronouncements by the DOF that the government would rely more on local sources of credit as a debt-management strategy.
Finance Secretary Cesar Purisima was quoted as saying earlier that borrowing more from the local capital market was prudent given the enormous liquidity of the country’s banking system and nearly record-low interest rates.
The decision to borrow more from the domestic market was also aimed at tempering appreciation pressures on the peso. Last year, the peso appreciated by nearly 7 percent against the dollar as it closed at 41.05:$1. The peso was cited as one of the fastest-appreciating currencies against the greenback last year.
Meantime, Purisima said the decision of the government to source bulk of its foreign loans from development lending institutions like the Asian Development Bank and the World Bank instead of the offshore capital market was part of its liability management strategy. Loans from these agencies carry much lower interest rates compared with commercial loans.
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Tags: borrowings , Business , Government
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