Monetary Board approved US$2B foreign borrowing for public sector in Q4 2022

For the period October to December 2022, the Monetary Board (MB) approved one (1) public sector foreign borrowing of US$2 billion, which is lower by 32.95 percent compared to the US$2.98 billion borrowings approved in the same period in 2021.

This pertains to a bond issuance of the Republic of the Philippines to fund the National Government’s (NG) general financing requirement.

Meanwhile, public sector foreign borrowings approved in 2022 amounted to US$10.32 billion, consisting of the following: (a) three (3) bond issuances (US$4.77 billion); (b) seven (7) project loans (US$4.68 billion); and (c) three (3) program loans (US$0.87 billion). These were 21.43 percent lower compared to the 2021 approvals of US$13.14 billion due to: (a) lower bond issuances (22.50 percent decrease from US$6.16 billion in 2021 to US$4.77 billion in 2022); and (b) significant decline in program loans (77.52 percent decrease from US$3.88 billion in 2021 to US$0.87 billion in 2022) which more than offset the increase in project loans (50.96 percent increase from US$3.10 billion in 2021 to US$4.68 billion in 2022).

These 2022 borrowings will fund the National Government’s: (a) general financing requirements (US$4.77 billion or 46.22 percent); (b) transportation projects (US$3.63 billion or 35.20 percent); (c) COVID-19 pandemic response projects and programs (US$1.35 billion or 13.09 percent); and (d) other infrastructure development projects (US$0.57 billion or 5.49 percent).

Under Section 20, Article VII of the 1987 Constitution of the Republic of the Philippines, prior approval of the Bangko Sentral ng Pilipinas (BSP), through its MB, is required for all foreign loans to be contracted or guaranteed by the Republic of the Philippines.

Similarly, Letter of Instructions No. 158 dated 21 January 1974 requires all foreign borrowing proposals by the NG, government agencies and government financial institutions to be submitted for approval-in-principle by the MB before commencement of actual negotiations.

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