The government’s borrowings as of end-May rose by 91.75 percent from its year ago level as foreign lenders and the domestic market were tapped to support funding for the country’s coronavirus disease 2019 (COVID-19) response.
According to data posted by the Bureau of the Treasury (BTr) on its website, gross financing in the first five months of the year totaled to P1.5 trillion, a significant increase from the P787.13 billion recorded a year ago.
Gross external borrowings for the period jumped by 68.93 percent to P356.64 billion, from P211.11 billion a year ago.
Meanwhile, gross domestic borrowings totaled to P1.152 trillion in the first five months of the year, soaring by 100.11 percent from the P576.02 billion posted in the same period last year.
For May alone, gross financing amounted to P289.82 billion, 130.73 percent up from the year ago level of P125.61 billion.
Gross foreign borrowings stood at P119.31 billion while P170.51 billion was recorded on the domestic side, posting increases of 59.72 percent and 234.94 percent, respectively.
Carlos Dominguez, Department of Finance secretary, earlier said higher borrowings this year are crucial to letting the government carry out a wide range of initiatives for the country to cope with the unexpected shocks unleashed by the COVID-19 pandemic and before that, the eruption of the Taal Volcano.
“While the government is borrowing more than usual this year in order to fund healthcare, social protection and other essential programs while our revenues are down, we have to be careful about spending too much above our means,” Dominguez said.
“None of us knows how long this pandemic will last. As we have borrowed a lot… fiscal space should be saved to afford us elbow room in case future circumstances require a new round of big healthcare spending, subsidies and/or stimulus programs,” he added.
The economic team earlier reported that a target budget deficit of 9 percent, which takes into account the administration’s proposed stimulus measures, would place it at the median of the Philippines’ peer group.
The DOF said this should hold true whether the country is compared to countries in East Asia and the Pacific, to its Association of Southeast Asian Nations neighbors, or to countries with credit ratings in the “BBB” to “A-“ range.
“Loans are not free money. They are advances that we, or even our children and their children, will have to pay for in some way in the future. The Duterte administration’s policy is to be careful not to borrow beyond sustainable levels, lest we fall into a vicious cycle of accumulating unmanageable debt, which might drastically increase our financing costs, and plunge us deeper into debt,” Dominguez said.
“Hence, it is an imperative that we limit state spending to a manageable and sustainable level equivalent to a 9 percent budget deficit,” he added.
