Borrowings in May alone drop 25.8%; foreign component plunges 95%
The national government reduced its gross borrowings in the five months to May 2025 by 6.6 percent year-on-year to P1.328 trillion, largely shaving off local debt, the Bureau of the Treasury (BTr) said on Sunday.
The comparative level of gross borrowings in the January to May 2024 period stood at P1.422 trillion.
Domestic borrowings in the five-month period this year, as shown on the BTr website on Sunday, were down 12.74 percent at P1.022 trillion, compared with P1.171 trillion a year earlier.
External debt was up 21.54 percent at P305.939 billion from P251.712 billion in the year-earlier period.
Of the total domestic borrowings, P629.158 billion came from the issue of fixed-rate treasury bonds, and P92.41 billion from treasury bills. The balance of P300 billion came from the treasury notes issued last April.
Apart from the triple-tranche global bond issue in February, which allowed the government to raise P191.965 billion, external borrowings during the five months consisted of P28.774 billion in project loans and P85.2 billion in program loans.
For the month of May alone, more drastic cuts in gross borrowings and their foreign component are detailed in the latter part of this report.
Efforts to manage debt
John Paolo Rivera, a senior research fellow at the Philippine Institute for Development Studies, said the decline in the national government’s total gross borrowings in the five-month period reflects the government’s effort to manage debt accumulation more prudently amid moderating budget pressures and improved domestic liquidity.
“It suggests a more selective issuance strategy to avoid crowding out private credit and reduce borrowing costs as interest rates ease,” Rivera said.
The increase in external borrowings in the first five months of the year was likely driven by frontloaded financing from multilateral and bilateral sources offering favorable rates, particularly for climate, infrastructure or program loans, he said.
However, Rivera warned of potential risk that goes with extenal borrowings. “While tapping external sources can diversify financing, it also increases exposure to forex and refinancing risks, which need to be carefully managed given peso volatility and global uncertainties,” Rivera explained.
Michael Ricafort, Rizal Commercial Banking Corp. chief economist, said the year-on-year decline in national government borrowings from January to May 2025 could be partly attributed to lower maturities of government securities that needed to be paid by the national government versus the level in the same period last year.
“Narrower budget deficit in some months in early 2025, as well as some budget surplus in April and January 2025, could have also helped reduce the need for more borrowings by the national government,” Ricafort said.
Borrowings in May
In May 2025 alone, the government’s gross borrowings fell by 25.85 percent to P192.305 billion from P259.334 billion a year earlier.
Domestic borrowings surged 41.25 percent to P186.058 billion from P131.721 billion a year earlier, while funds owed to external sources plunged by 95.1 percent to P6.247 billion from P127.613 billion in May last year.
Tactical timing
Rivera said the sharp shift in the borrowing mix for May likely reflects tactical timing.
The “national government may have deferred offshore issuances due to market volatility or unattractive pricing, while taking advantage of strong domestic liquidity and investor appetite for government securities,” Rivera said.
Reinielle Matt Erece, economist at Oikonomia Advisory & Research Inc., said that amid increasing geopolitical tensions and trade wars, reducing exposure from foreign borrowings allow the country to better manage debt.
“This is because debt repayments, if the peso depreciates against the dollar, will be more expensive. Borrowing more from domestic sources shields the country’s debt from external fluctuations,” Erece added.
