BTr: Govt to borrow less in Q3
Credit to Author: MAYVELIN U. CARABALLO, TMT| Date: Wed, 26 Jun 2019 16:28:12 +0000
THE government would borrow less from local sources in the third quarter, according to the borrowings program released by the Bureau of Treasury (BTr) on Wednesday.
July-to-September borrowings was set at P230 billion, down 26.3 percent from P315 billion in April to June and 23.3 percent from P300 billion in the same period last year.
Of the amount set, the government would borrow P90 billion through the issuance of Treasury bills and the remaining P140 billion through Treasury bonds.
“The BTr is expecting borrowing costs to continue easing, thus compelling them to trim its offering for the third quarter,” Security Bank Corp. Assistant Vice President and chief economist Robert Dan Roces said.
The Treasury’s expectation of reduced borrowings, he added, can be attributed to the Bangko Sentral ng Pilipinas’ (BSP) decision to pause on reducing interest rates last week.
“This after the BSP kept policy rates unchanged last week and enacted a ‘prudent pause’ to await further confirmation from data that inflation would indeed head lower — which the central bank forecasts also downgraded,” the economist said.
The central bank’s policymaking Monetary Board decided on June 20 to keep its overnight borrowing, lending and deposit rates at 4.50 percent, 5.00 percent and 4.00 percent, respectively.
Monetary authorities also cut their 2019 inflation forecast to 2.7 percent from 2.9 percent, and 2020 projection to 3.0 percent from 3.1 percent.
For his part, Rizal Commercial Banking Corp. economist Michael Ricafort said the lower borrowings program “may be partly attributed to some increase in foreign borrowings, especially through the upcoming $1 billion worth of Samurai (Japanese yen) bonds to be issued by the national government in 3Q (third quarter) 2019.”
Government underspending earlier this year and an improved fiscal performance resulting from higher tax-revenue collections “also fundamentally reduced the requirements for domestic borrowings in 3Q 2019, compared to the previous quarter and…the same quarter a year ago.”
A dispute between the Senate and the House of Representatives over alleged insertions resulted in the four-and-a-half-month delay of the passage of this year’s budget. This forced the government to run on last year’s budget, limiting it to spend for items detailed in the 2018 outlay and not on programs and projects supposed to be implemented this year.
This put total national government spending in January to March — which include expenditures for infrastructure and capital outlay, maintenance, personnel services and subsidies — at P778 billion, up 0.8 percent or P6 billion from the amount in the same period last year.
Meanwhile, total tax revenues of the government rose by 17 percent to P265.4 billion in May.
To recall, the government has a programmed borrowing mix of 75 percent for domestic borrowings and 25-percent foreign ones this year, as it looks to diversify its investor base and tap new markets.
Latest BTr data have shown that the government’s gross borrowings in the first four months of the year rose to P661.521 billion, up 172 percent from P248.871 billion a year ago.
Bulk of the gross borrowings came from domestic sources, which reached P525.108 billion in the period, rising more than five times from the P95.014 posted in January to April 2018.
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