THE national government’s gross borrowings in the first four months of the year reached P1.65 trillion, according to data from the Bureau of the Treasury (BTr).
The data showed this was a 36-percent increase over last year’s P1.22 trillion, and was traced to higher domestic borrowings in the January to April period.
Gross domestic borrowings surged by 43.38 percent to P1.41 trillion in between January and April 2021 from last year’s P982.13 billion.
In April, gross borrowings inched up by 3.5 percent to P271.95 billion in 2021 from P262.75 billion in 2020. This was mainly driven by external gross borrowings which surged 82.91 percent to P165.8 billion from P90.65 billion in April 2020.
The government’s external borrowings in April were composed of Euro bonds reaching P121.97 billion, followed by Samurai bonds worth P24.19 billion.
There were no Euro and Samurai bond offerings made in the same period last year.
Meanwhile, domestic gross borrowings in April contracted 38.32 percent to P106.15 billion in 2021 from P172.1 billion in 2020, BTr data showed.
There were no Retail Treasury bonds, premyo bonds, and short-term borrowings from the Bangko Sentral ng Pilipinas in April 2021. However, Fixed Rate Treasury bonds reached P95 billion in April, a 13-percent growth from the Fixed Rate Treasury bonds of P84.07 billion in April 2020.
The government also offered P11.15 billion worth of Treasury Bills, an 87.33-percent decline from the P88.03 billion floated in April 2021.
Crisis lessons
Meanwhile, in an economic bulletin, the Department of Finance (DOF) said the adoption of a transparent and prudent deficit and debt management was among the lessons learned from previous crises.
The DOF said the country has undergone severe economic crises, namely: the debt crisis in 1984-1985; the Asian financial crisis in 1998-1999 and the Covid-19 health crisis in 2020 and is still ongoing.
The DOF said that during crises, the government should place debt benchmarks to avoid overborrowing. This means ensuring that the economic returns outweigh the costs in order for the country’s debts to be repaid.
“Project economic returns should be higher than project costs to ensure that debts can be repaid. Public sector borrowings need to be approved by the independent monetary authority [the BSP] to ensure compliance with this good practice,” DOF said.
Other lessons from these crises include saving money for the “rainy years.” In good years when the GDP is growing rapidly and interest rates are low, debts and deficits should be placed at a minimum to accumulate reserves for “rainy days,” DOF said.
Another lesson is to conserve resources and undertake efforts to maximize them. DOF stressed that even during crises, revenues should be conserved to prevent the country from experiencing difficulties.
In previous years, DOF said the country scrimped on infrastructure spending, averaging only 2 percent of GDP from 1946 to 2000, to spend on social programs. This prevented the country from attaining the same level of growth recorded by its Asean neighbors.
“A country needs revenues not only to fund social programs but to also ensure building and maintenance of efficient infrastructure,” DOF said. Another lesson, DOF said, is to aim to be the best and the brightest even during crises. This means encouraging competition in order for local and foreign firms to offer cheaper prices for consumers.
DOF said competition is crucial in “taming the inflation tiger.” Through competition, firms are driven to innovate and offer the best goods at affordable prices to their customers.
“Inflation reveals a problem, either supply or demand, and the problem cannot be solved by just imposing band-aid measures like quantitative restrictions, safeguard measures and price controls. Solve the root of the problem through a productivity program,” DOF said.
“Allowing inefficiencies to persist and shoving them under the dustbin of neglect will just enable them to fester and come back to haunt the economy years later,” it added.
Finance Secretary Carlos G. Dominguez III earlier said they expect the national government’s debt this year to reach 57 percent of GDP. As of end-2020, the country’s debt to GDP ratio surged to 54.5 percent—a 14-year-high—coming from a record-low 39.6 percent in the previous year.