29 January 2021
Monetary Board approved US$4.2 billion foreign borrowings
of the public sector in Q4 2020
Press Release: The Monetary Board (MB) approved public sector foreign borrowings in Q4 2020 totaling US$4.2 billion, 7.7 percent higher than the Q3 2020 level of US$3.9 billion. These consist of: (a) one [1] bond issuance amounting to US$2.8 billion; (b) three [3] project loans aggregating to US$814.3 million; and (c) two [2] program loans amounting to US$600.0 million. Of these, US$4.04 billion (97.0 percent) pertains to foreign borrowings of the National Government (NG).
These foreign borrowings will fund: (a) NG’s general financing requirements for Q4 2020 (US$2.8 billion); (b) program/project loans in response to the COVID-19 pandemic (US$700.0 million); (c) disaster risk financing (US$500.0 million); (d) customs modernization (US$88.3 million); and (e) water transmission improvement (US$126.0 million).
Meanwhile, public sector foreign borrowings approved in 2020 reached US$17.7 billiona. These consist of: (a) three [3] bond issuances (US$6.6 billion); (b) 15 project loans (US$3.7 billion); and (c) 16 program loans (US$7.5 billion). Borrowings approved in 2020 were 82.5 percent higher compared to the 2019 figure of US$9.7 billion due to higher bond issuances (88.6 percent increase from US$3.5 billion in 2019 to US$6.6 billion in 2020) and surge in program loans (435.7 percent increase from US$1.4 billion in 2019 to US$7.5 billion in 2020). The increase in public sector foreign borrowings in 2020 are, among others, to fund the government’s COVID-19 pandemic response programs and to support economic recovery.
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 also 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 assure external debt sustainability.
a Amounts may not add up due to rounding
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