The government’s foreign loans approved by the BSP were eased in 2021

Treasury bonds procured by foreign lenders and approved by the Monetary Board totaled $13.1 billion in 2021, down 26 percent from the $17.7 billion that got the green light in 2020.

The 1987 Philippine Constitution requires prior approval by the highest political decision-making body of the Bangko Sentral ng Pilipinas (BSP) for all foreign loans that the public sector – the national government itself and its agencies and financial institutions – accept or guarantee.

In addition, before actual negotiations can begin, foreign loan proposals must be submitted to the Monetary Board for approval in principle.

In response to a pandemic

According to the BSP, nearly half, or $5.9 billion, of foreign loans secured last year were primarily for the government’s response to the COVID-19 pandemic, including vaccine purchases and social protection and supporting the economic recovery.

Another $5.9 billion was earmarked for general government funding needs, while $400 million was earmarked for “other infrastructure projects.”

In 2021, government bonds were raised mainly through the issuance of US$6.2 billion in bonds, loans for programs (US$3.9 billion), as well as specific projects (US$3.1 billion).

In 2020, foreign debt rose 83 percent from 2019’s pre-pandemic level of $9.7 billion as the government struggled to deal with the initial brunt of COVID-19 and an economy crippled by the public health crisis to support.

Loans approved in 2021, although still about 30 percent higher than pre-pandemic debt, fell as the government issued fewer bonds and signed fewer program loans.

Reducing the risk of disaster

In the fourth quarter of 2021 alone, external debt reached $3 billion, of which 90 percent or $2.7 billion went to COVID-19 response and the rest to disaster risk reduction.

Borrowings in the fourth quarter were 28 percent lower than the $4.2 billion approved for the same period in 2020.

According to the Ministry of Finance, foreign funds — loans taken out as well as grants received — for the COVID-19 response have totaled $25.9 billion, or 1.3 trillion pesos, as of Jan. 14.

Of the total, $22.25 billion came in the form of loans from multilateral lenders and bilateral development partners, and offshore commercial lending through government bonds.

Recent inflows include $1.1 billion from the World Bank, $1 billion from the Asian Development Bank (ADB), $285 million from the Agence Française de Développement, and $100 million from Export-Import Bank of Korea-Economic Development Cooperation Fund.

In 2021 alone, the Philippines received a total of $2 billion from the World Bank, ADB, and Asian Infrastructure Investment Bank specifically for vaccine and booster purchases.

According to the Bureau of the Treasury, the national government debt was fixed at 11.93 trillion pesos at the end of November 2021. At the end of 2020, the debt was 10.25 trillion pesos.

continue reading

Do not miss any news and information.

Subscribe to INQUIRER PLUS to get access to The Philippine Daily Inquirer and 70+ titles, share up to 5 gadgets, hear the news, download as early as 4am and share articles on social media. Call 896-6000.

For feedback, complaints or inquiries contact us.

Comments are closed.