By Aubrey Rose A. Inosante, Correspondent
THE NATIONAL GOVERNMENT’S (NG) overall borrowings decreased in October as it significantly cut back on borrowing from the local market, according to the Bureau of the Treasury (BTr).
Data from the BTr indicated that total overall borrowings fell by 42.6% to P129.26 billion in October, down from P225.2 billion in the same month a year prior.
On a month-to-month basis, overall borrowings plummeted by 64.8% from P367.18 billion in September.
Local borrowings dwindled by 61.37% to P67.46 billion in October, down from P174.63 billion last year. The October 2023 figures also accounted for the government’s P71.78-billion retail onshore dollar bond offerings.
During October of this year, local borrowings included P45 billion in fixed-rate Treasury bonds (T-bonds) and P22.46 billion in Treasury bills (T-bills).
Conversely, overall external debt rose by 22.21% to P61.8 billion in October, up from P50.57 billion a year earlier.
This comprised P49.89 billion in program loans and P11.91 billion in project loans.
“(The decrease in overall borrowings) may be partly attributed to the budget surplus in October 2024 and the narrower budget deficit for the first 10 months of 2024, which fundamentally lessened the requirement for additional borrowings/debt by the National Government,” stated Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort.
In October, the NG reported a P6.3-billion budget surplus, reversing from a P34.4-billion deficit in the same month last year. This brought the budget deficit for the first 10 months to P963.9 billion, reduced from a P1.02 trillion gap a year ago.
“Additionally, increased dividends/remittances of earnings/surplus from certain GOCCs [government-owned or -controlled corporations] to the National Government in recent months contributed to the reduced necessity for the NG to borrow,” Mr. Ricafort mentioned.
As of October 2024, 52 GOCCs had remitted P95.9 billion in dividends, a rise of 51% compared to the same period last year, the Department of Finance reported last week.
“The reduction in October borrowings might be linked to the anticipation of further declines in interest rates, with some banks and investment firms adopting a wait-and-see approach before acquiring government securities,” Philip Arnold “Randy” P. Tuaño, dean of the Ateneo School of Government, commented to BusinessWorld via e-mail over the weekend.
The BSP has lowered benchmark rates by a total of 50 basis points during its meetings in August and October.
TEN-MONTH PERIOD
Meanwhile, BTr reported that overall borrowings in the January-to-October span surged by 22.98% to P2.43 trillion from P1.98 trillion a year ago.
The majority, or 76.69%, of the 10-month overall borrowings were sourced domestically.
Domestic debt reached P1.86 trillion, reflecting a 22.64% increase from P1.52 trillion a year ago.
This was composed of P1.07 trillion in fixed-rate T-bonds, P584.86 billion in retail T-bonds, and P209.38 billion in T-bills.
External debt during the first 10 months grew by 24.09% to P566.25 billion from P456.31 billion the previous year.
This consisted of P256.24 billion in global bonds, P223.04 billion in program loans, and P86.97 billion in new project loans.
For the remainder of the year, Mr. Tuaño indicated that borrowings are anticipated to rise in peso value as the budget deficit continues to expand.
The Treasury is likely waiting for a further decrease in interest rates, thereby constraining the sale of government securities in October, he added.
The Monetary Board may implement another rate cut either in December or the subsequent meeting, Bangko Sentral ng Pilipinas Governor Eli M. Remolona, Jr. noted earlier.
“Moving forward, reduced US and local rate cuts would aid in lowering the NG’s interest payments/debt servicing costs, consequently diminishing the need for additional NG borrowings,” Mr. Ricafort stated.
This year’s borrowing strategy is set at P2.57 trillion, with P1.92 trillion sourced domestically and P646.08 billion from international markets, based on the latest Budget of Expenditures and Sources of Financing data.