PHL scrambling for more funds, to borrow P1.2T in 2019

The Philippines intends to borrow more than P1 trillion next year from foreign and domestic creditors—the highest borrowing program so far by the government—to provide additional funding for the planned budget for 2019.

According to the Bureau of Treasury (BTr), the government is increasing its borrowings by 20 percent to P1.19 trillion in 2019 from P986 billion this 2018.

The bulk or P891.7 billion, equivalent to 75 percent of the total, will be sourced from local lenders and may be in the form of Treasury bills, Treasury bonds, and Retail Treasury Bonds.

The balance of P297.2 billion will be sourced from overseas creditors and may include Sukuk bonds that comply with the Sharia law— to entice Muslim investors.

“Sukuk is an option, but would still take time to address an enabling environment,” National Treasurer Rosalia De Leon said in a text message to GMA News Online on Tuesday.

Last week, the Development Budget Coordination Committee (DBCC) raised the 2019 deficit ceiling to maintain aggressive spending on infrastructure development.

Earlier this year, the Asian Development Bank (ADB) said it will extend a total of $105 million in loans and grants to assist the Philippines with its infrastructure program.

The Manila-based multilateral lender also revealed last week that it signed a $7.1-billion sovereign lending program from 2019 to 2021.

A memorandum of understanding was signed with the National Economic and Development Authority (NEDA) and the Department of Finance on June 29, the bank said Wednesday.

The Philippines is also seeking additional funding from the Asian Infrastructure Investment Bank (AIIB), specifically for big-ticket projects.

Independent economic consultant John Paolo Rivera said the country must first give full details on the 2019 budget for the borrowing program to be fully assessed.

“We need to see how much is the budget for the Build, Build, Build, how much funding is required and needed, and sources of funding,” he said.

“The amount to be borrowed can only be justified if full information is given,” Rivera noted.

If the Duterte administration pushes through with its borrowing program, it must seek the best terms available.

“In my opinion, this is an issue of borrowing from a source that can provide the lowest interest rate, most favorable payment terms, and after-construction agreements,” Rivera said.

For his part, University of Asia and the Pacific (UA&P) School of Economics Dean Cid Terosa said more borrowings are warranted, despite the loan pledges obtained by the government.

“Pledges may or may not be actualized. They serve as supplementary sources of funding and not as primary sources of funding,” Terosa noted. —VDS, GMA News