Foreign borrowings up 118% at $6.29B
Approvals by the Bangko Sentral ng Pilipinas (BSP) of private foreign borrowings more than doubled in the first quarter of the year compared with a year earlier in what analysts view as a government strategy to frontload financing needs before global borrowing conditions tighten further.
In a statement, the BSP said the approved foreign borrowings amounted to $6.29 billion in the January to March quarter of 2025, or 118.91 percent higher than $2.87 billion recorded in the same quarter of 2024.
The foreign borrowings were in the form of bond issuances worth $3.33 billion, five project loans worth $1.46 billion, and three program loans worth $1.50 billion.
Budget, infra financing
The BSP said the proceeds will be used to fund various national government budget requirements, socio-economic projects such as infrastructure and transportation, and the settlement of maturing debts.
Under the law, Section 20, Article VII of the 1987 Constitution, all foreign borrowing proposals by the national government, state agencies, and government financial institutions and loans guaranteed by the national government require prior approval of the BSP’s Monetary Board.
This is in line with the BSP’s task of ensuring that the country’s foreign debt remains manageable.
Frontload financing needs
John Paolo Rivera, senior research fellow at the Philippine Institute of Development Studies, said the government’s borrowing strategy makes sense, given the risk of interest rates going up due to inflationary pressures and global trade disruptions.
Michael Ricafort, RCBC chief economist, noted the government’s frontloading effort to meet its maturing debt, especially the $3.29 billion national government global bond issue made in January 2025.
Ricafort said reducing the share of foreign borrowings in its total borrowing mix to lessen the foreign exchange risks entailed in foreign debt is aligned with the frontloading tactic.
Rivera emphasized that it is crucial to monitor debt closely as external borrowing costs remain high.
Matter of prudence
Ricafort said the higher borrowing is “a matter of prudence,” given the volatile global financial market, largely due to Trump’s hefty tariffs and other US protectionist measures.
However, Ricafort said future Fed rate cuts could help mitigate debt servicing costs in the coming months.
Ricafort also cited foreign funding for the government’s infrastructure and other developmental projects.
“This is a function of higher amount of maturing foreign debt and the need to finance the NG’s wider budget deficit, given higher debt servicing costs over the past 3 years when there was a net increase in global and local interest rates and weaker peso exchange rate versus the US dollar,” Ricafort added.
