Government’s gross borrowings slump in March

The national government’s (NG) gross borrowings dropped in March as external debt declined, the Bureau of the Treasury (BTr) reported.

The latest data from the Treasury showed that total gross borrowings slid by 7.15% to PHP 192.45 billion in March from PHP 207.27 billion in the same month a year ago.

Month on month, gross borrowings slumped by 43.32% from PHP 339.55 billion in February.

Gross external debt stood at PHP 34.65 billion in March, down by 31.89% from PHP 50.87 billion a year ago. This consisted of PHP 28.91 billion in program loans and PHP 5.74 billion in project loans.

On the other hand, gross domestic borrowings inched up by 0.9% to PHP 157.8 billion in March from PHP 156.4 billion in the same month last year.

This consisted of PHP 132.4 billion in fixed-rate Treasury bonds and PHP 25.4 billion in Treasury bills.

Domestic debt accounted for the bulk or 82% of the total gross borrowings.

Oikonomia Advisory and Research, Inc. economist Reinielle Matt M. Erece said the global bond offering in February led to lower borrowing requirements in March.

The BTr raised USD3.3 billion or PHP 192 billion from the issuance of dollar bonds and euro-denominated sustainability bonds in late January. The bonds were settled in February.

Meanwhile, NG gross borrowings dropped by 30.61% to PHP 745.14 billion in the first quarter from PHP 1.07 trillion in the same period last year.

Domestic borrowings for the period accounted for 60.5% of the total borrowings in the January-to-March period.

Gross domestic borrowings slumped by 52.87% to PHP 450.8 billion in the three-month period from PHP 956.58 billion a year ago.

This consisted of PHP 402.4 billion in fixed-rate Treasury bonds and PHP 48.4 billion in Treasury bills.

At end-March, external gross borrowings surged by 151.02% to PHP 294.34 billion from PHP 117.26 billion in the same period in 2024, reflecting the proceeds of the global bond issuance.

This was made up of PHP 191.97 billion in global bonds, PHP 85.2 billion in program loans and P17.18 billion in new project loans.

External borrowings in the January-to-March period last year were only composed of new project loans and program loans.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort attributed the decline in gross borrowings in the first quarter to the higher base effects in the same period in 2024 which had the large retail Treasury bond (RTB) offering.

Mr. Ricafort noted the global bond issuance earlier this year could be part of the government’s strategy to frontload borrowings.

“The USD3.29-billion global bond in early 2025 could be part of hedging/borrowing amid market volatility due to Trump’s higher US import tariffs to somewhat frontload some borrowings to almost completely the USD3.5 billion programmed for 2025 as a matter of prudence, to diversify borrowing sources to finance the budget deficit,” he said via Viber message over the weekend.

The NG budget gap ballooned by an annual 91.78% to PHP 375.7 billion in March. This brought the first-quarter deficit to PHP 478.8 billion, higher by 75.62% from the PHP 272.6-billion gap in the same period a year ago.

Mr. Ricafort said the government would likely borrow more from domestic sources this year to better manage foreign exchange risks.

“Going forward there would be large maturing government securities in August and September 2025 that would lead to NG borrowings such as RTB issuance around that time,” he added.

Meanwhile, Mr. Erece anticipates an increase in gross borrowings in the coming months.

“The planned developmental and social projects may exceed the country’s fiscal space, causing the need to borrow more to finance this deficit,” he said.

The NG capped its deficit ceiling at PHP 1.54 trillion or 5.3% of gross domestic product this year.

“In addition, a ‘borrow now’ strategy may be seen as a way to maximize relatively lower rates as inflation risks may prompt major central banks such as the Fed to either hold interest rates steady or even push them higher in the long run to tame inflation if trade wars persist,” Mr. Erece said.

This year’s financing program is set at PHP 2.545 trillion, with 80% coming from local lenders and 20% from foreign sources. – Aubrey Rose A. Inosante, Reporter