MB-approved foreign borrowings more than double in Q1

Monetary board (MB)  approvals for public-sector foreign borrowing more than doubled in the first quarter, the central bank said.

Data from the Bangko Sentral ng Pilipinas (BSP) showed approved public-sector foreign borrowing soared to USD 6.29 billion in the first quarter from USD 2.87 billion in the same period a year ago.

Broken down, the approvals consisted of bond issuances worth USD 3.33 billion, five project loans (USD 1.46 billion) and three program loans (USD 1.5 billion).

“The approved foreign borrowings have medium- to long-term maturities,” the BSP said.

It said the proceeds of the bond issuances will be used to “fund various budget requirements of the National Government (NG), including socioeconomic programs and projects, as well as settlement of maturing financial obligations.”

“The program loans are meant to fund projects on economic development and finance initiatives, while the project loans will fund initiatives in the areas of transportation and infrastructure,” it added.

Under the Constitution, the Monetary Board is required to approve any foreign loan agreements entered by the NG.

The BSP must also approve in principle any foreign borrowing proposals by the National Government, government agencies and government financial institutions before actual negotiations.

The Monetary Board must submit a report of its decision on these applications for loans within thirty days from the end of every quarter of the calendar year.

The central bank said this is in line with its task of “ensuring that the country’s foreign debt remains manageable.”

Latest data from the BSP showed the Philippines’ outstanding external debt rose by 9.8% to USD 137.63 billion as of end-December 2024 from USD 125.39 billion a year ago.

This brought the external debt-to-gross domestic product (GDP) ratio to 29.8% at the end of 2024, higher than the 28.7% at end-2023.

The NG’s gross borrowings rose by 4.92% to PHP 213.14 billion in January from PHP 203.15 billion a year prior, latest Treasury data showed.

Of this, gross external debt dipped by 1.14% year on year to PHP 60.94 billion in January. This consisted of program loans (PHP 56.29 billion) and project loans (PHP 4.65 billion).

This year, the government’s financing program is set at PHP 2.545 trillion, where 20% will be sourced from foreign sources. The Finance department is seeking to gradually adjust the borrowing mix to rely less on external borrowings to mitigate foreign currency risk. — Luisa Maria Jacinta C. Jocson