BSP approves $3.9B in Q2 foreign borrowings

By Francis Allan L. Angelo

The Monetary Board of the Bangko Sentral ng Pilipinas (BSP) approved $3.90 billion in public sector foreign borrowings for the second quarter of 2024, marking a 43 percent increase from the $2.73 billion approved in the same period last year.

The figure includes a $2.0 billion bond issuance and $1.90 billion from three project loans.

These borrowings aim to fund the National Government’s general budget financing and asset financing/refinancing in line with the Philippines’ Sustainable Finance Framework.

The approved funds will also support transport infrastructure projects.

Under Section 20, Article VII of the 1987 Constitution, the BSP’s Monetary Board must approve all foreign loans contracted or guaranteed by the Republic of the Philippines.

Additionally, a 1974 Letter of Instructions mandates that all foreign borrowing proposals by the National Government, government agencies, and financial institutions must receive the Monetary Board’s approval-in-principle before actual negotiations begin.

The BSP emphasizes the judicious use of resources and ensures that external debt requirements remain at manageable levels to support debt sustainability.

In a report in July 4, 2024, the Bureau of Treasury reported that the country’s Debt at P15.35 trillion as of end-May 2024.

Domestic debt reached P10.44 trillion at the end of May, an increase of P134.34 billion or 1.3 percent from the end-April 2024 level. This rise is primarily due to the P131.66 billion net issuance of government securities and a P2.68 billion impact from peso depreciation on foreign-currency-denominated domestic debt.

Since the beginning of the year, domestic debt has grown by P424.91 billion or 4.2 percent, and on a year-over-year basis, it has expanded by P854.33 billion or 8.9 percent.

External debt stood at P4.90 trillion, which is P196.04 billion or 4.2 percent higher than the end-April 2024 level.

The increase in May’s external debt is attributed to P122.04 billion in net foreign loan availment and a P76.94 billion upward revaluation of US dollar-denominated debt.

Favorable third-currency movements provided a P2.94 billion downward revaluation effect.

External debt has increased by P306.42 billion or 6.7 percent from its end-December 2023 level and by P339.15 billion or 7.4 percent on a year-over-year basis.