PH to borrow more from domestic market to raise P2.46 trillion

The Philippine government would be relying heavily on the domestic front to raise over P2 trillion in borrowings this year to beef up the state coffers.

In a statement on Friday, the Department of Finance (DOF) said the country’s total borrowing requirement this year stood at P2.46 trillion.

Data from the Department of Budget and Management’s (DBM's) Budget of Expenditures and Sources of Financing for Fiscal Year 2024 showed the borrowing program for the year was pegged at P2.46 trillion, higher than the P2.207 trillion borrowing program in 2023.

For this year’s borrowing program, the DOF said the government would continue to adopt a 75:25 borrowing mix in favor of domestic sources.

This prudent debt management strategy would allow the country to effectively mitigate foreign exchange risks, take advantage of the abundant liquidity in the country’s financial system, and support the development of the local debt and capital markets, according to the Finance Department.

The borrowing plan was presented during the DOF’s briefing session on the strategic financing program for 2024, led by Finance Secretary Ralph Recto, at the Bureau of the Treasury (BTr) office on Jan. 17, 2024.

To raise the borrowing requirement funds, the DOF said the Treasury was targeting to issue the 30th tranche of its Retail Treasury Bond (RTB) within the first quarter.

“The RTBs encourage ordinary Filipinos to start investing in safe and stable sources of passive income, while promoting financial inclusion. To further this agenda, the BTr is looking to engage more digital finance platforms, allowing the BTr to reach a wider investor base,” it said.

As of end-November 2023, the country’s sovereign debt stock stood at a new record high of P14.51 trillion, up 0.19% from P14.48 trillion seen as of end-October 2023.

The country’s debt-to-gross domestic product (GDP) ratio, which measures the amount of the government’s debt relative to the size of the economy, improved to 60.2% as of the third quarter of the year from 61% in the second quarter.

This came after the faster economic growth seen in the same period of 5.9%, from 4.3% in the second quarter.

A lower debt-to-GDP ratio indicates that the country can pay off its debt without having adverse impacts on the economy.

Under the administration’s Medium Term Fiscal Framework, the government aims to bring down the debt-to-GDP ratio to less than 60% by 2025 and further shrink it to 51.1% by 2028. — DVM, GMA Integrated News