THE National Government鈥檚 (NG) gross borrowing聽rose 43%聽year on year in聽July聽as the budget deficit widened in recent months, the Bureau of the Treasury (BTr) said.
The BTr reported that gross borrowing in聽July聽rose聽to聽P188.65聽billion from聽P131.94聽billion a year earlier.
Month on month, gross borrowing rose聽27.32%聽from聽June.
Nearly all of July鈥檚 gross borrowing聽(95.73%) was domestically sourced.
Domestic debt聽rose聽63.43% year on year聽to聽P180.59聽billion in July.
Gross domestic borrowing for the month included聽P155 billion聽in聽fixed-rate Treasury bonds and聽P25.59聽billion in Treasury bills (T-bills).
Gross external borrowing declined聽62.39% year on year聽to聽P8.06聽billion in July, the BTr said.
In the seven months to July, gross borrowing聽rose聽15.49%聽to聽P1.76聽trillion. Some 84.34% was borrowed from domestic sources.
Gross domestic borrowing rose聽30.69% year on year聽to聽P1.48聽trillion at the end of July.
Domestic debt during the period consisted of聽P764.21聽billion in fixed-rate Treasury bonds,聽P584.86聽billion in retail Treasury bonds, and聽P134.66聽billion in T-bills.
On the other hand, external gross borrowing dropped聽28.98%聽to聽P275.48聽billion in the seven months to June.
This consisted of聽P115.25聽billion in global bonds,聽P100.5聽billion in program loans, and聽P59.73聽billion in new project loans.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said widening budget deficits required the government to borrow more.
In the first seven months, the NG鈥檚 budget deficit widened 7.2% year on year to P642.8 billion.
Debt service costs also rose amid the peso鈥檚 continued weakness since 2022, Mr. Ricafort said.
The peso closed at P58.365 at the end of July, strengthening by 24聽centavos聽from the end of June, according to the Bankers Association of the Philippines.
鈥淔or the coming months, further local and Fed rate cuts and a stronger peso recently could help reduce the NG鈥檚 debt service costs, but (debt remains) a function of the budget deficit trend for the coming months,鈥 Mr. Ricafort said via Viber.
Last month, the Monetary Board eased interest rates by 25 basis points (bps) to 6.25%, from an over 17-year high of 6.5%.
The Bangko Sentral ng Pilipinas could deliver another 25-bp rate cut in the fourth quarter, Governor Eli M. Remolona, Jr. has said.
The Federal Reserve could begin its easing cycle as early as this month, Chairman Jerome H. Powell said on Aug. 23.
鈥淗igher borrowing can be typically attributed to lagging revenue collection in the course of the fiscal year, as revenue becomes insufficient to cover the expenditure requirements of government,鈥 Terry L. Ridon, a lawyer and convenor at think tank InfraWatch PH, said via Viber.
鈥淗owever, for as long as government keeps within or close to the 60% standard of debt-to-GDP ratio, it should not be a serious cause of concern,鈥 he said.
The NG鈥檚 debt-to-GDP ratio was 60.9% at the end of June. This is above the 60% threshold deemed manageable for developing countries, according to international development banks.
Despite this, the government should find ways to keep its borrowings within the threshold, Mr. Ridon added.
The debt-to-GDP ratio is projected at 60.6% by the end of 2024 from 60.1% in 2023, BTr said.
This year鈥檚 borrowing plan is set at P2.57 trillion, with P1.92 trillion from domestic sources and P646.08 billion from foreign sources, according to the Budget of Expenditures and Sources of Financing data. 鈥 Beatriz Marie D. Cruz
