MANILA, Philippines – Government borrowings soared 130 percent in the first quarter of this year as the budget deficit of the Arroyo administration more than doubled during the review period.
Data from the Bureau of the Treasury (BTr) showed that the government borrowed a total of P351.29 billion from January to March this year – about P198.86 billion more than the P152.43 billion it borrowed in the same period last year.
The Department of Finance (DOF) said the increase in government borrowing was made necessary as the deficit also increased to P119.7 billion, overshooting its quarterly ceiling and surpassed its P51.6-billion deficit over the same period last year.
The government’s foreign borrowings increased by more than four-fold to P95.68 billion in the first quarter of the year from P22.36 billion.
The increase resulted from the doubling of the government’s foreign commercial borrowing from $750 million last year to $1.5 billion.
The government also availed of more official development assistance loans from multilateral lending institutions such as the World Bank, Asian Development Bank, Japan Bank for International Cooperation, and others.
Official development assistance or ODA loans in the first three months included P9.622 billion from the World Bank’s International Bank for Reconstruction and Development for “Food Crisis Response,” another P7.056 billion from ADB for the “Government Justice Reform,” and P4.63 billion from JBIC for the Development Policy Loan.
These were quick-disbursing program loans that went directly into the budget.
The government also used up P2.99 billion worth of project loans from international lenders in the first quarter of the year—these were funds that would be spent specifically on projects lined up for the purpose.
On the other hand, the government’s borrowings from domestic creditors almost doubled P255.61 billion in the first quarter from P103.1 billion in the same quarter last year.
Data showed that the BTr issued P144.5 billion worth of five- and seven-year benchmark bonds as it retired P136.6 billion worth of existing bonds in January as part of measures to boost the liquidity of the domestic bond market.
On the other hand, the BTr said the country also paid P321.8 billion worth of foreign-denominated debt as well as Treasury bills (T-bills) and Treasury bonds (T-bonds) from January to March, or P182.68 billion more than the P139.12 billion it paid in the same period last year.
In all, the BTr said the government borrowed P29.49 billion in the first quarter to finance the budget deficit.
The Arroyo administration has increased its borrowing for 2009 to P613.9 billion after it revised its deficit ceiling from P172 billion to P199 billion in anticipation of a bigger slowdown in the economy.
The bulk of this year’s government borrowing will remain domestic, but the proportion would decline slightly to 72 percent from the previous level of 75 percent.
Finance Undersecretary Roberto Tan announced that the revisions in the borrowing requirement for this year stemmed from the increase in the deficit ceiling.
The government was also forced to increase the amount it had to borrow because revenues were declining this year, indicating that there would be no other way to finance the increase in its spending. –Des Ferriols, Philippine Star