Revved up spending sparks higher debts
In the first seven months, domestic debts reached P1.17 trillion, while foreign borrowings were at P387.88 billion
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In the first seven months, domestic debts reached P1.17 trillion, while foreign borrowings were at P387.88 billion
The government's catch-up spending after the expenditure slowdown in the first half has started in earnest, causing gross national government financing to increase in the first seven months, mainly from domestic borrowings.
Latest data from the Bureau of Treasury, or BTr, showed gross borrowing from January to July 2023 reaching P1.46 trillion, up from P1.02 trillion.
The figure comprises the entire sum of government loans from domestic and international sources to cover expenditures and to plug the budget gap.
In the first seven months, domestic debts reached P1.17 trillion, while foreign borrowings were at P387.88 billion.
Fixed-rate treasury bonds generated P794.53 billion, retail treasury bonds grew to P283.76 billion, and net treasury bills raised P88.7 billion.
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Project loans totaled P79.21 billion, program financing was worth P145.06 billion, and global bonds of P163.60 billion made up the entire amount of external funding.
The Department of Budget and Management, or DBM, has directed agencies to submit catch-up plans following the below-programmed spending in the first half of 2023.
The move was meant to head off underspending, which in previous administrations prevented growth from realizing its full potential.
Fiscal data traced the below-target spending in the first semester to ongoing projects and programs encountering "billings or payment concerns or issues."
The DBM also warned agencies that poor spending may result in smaller budgets in subsequent years as it bases allocations on utilization rates in evaluating absorptive capacities.
A low utilization rate means an agency cannot utilize new funds. "Agencies which needed to increase utilization rates have promised to produce catch-up plans during the budget deliberations," according to DBM.
The Marcos administration's borrowing in July came to P131.13 billion, down from P174.21 billion during the same month last year.
The decrease in borrowing from the domestic market is mainly the cause of the decline.
In July 2023, gross local financing stood at P167.81 billion. However, the government's net local borrowing reached P110.5 billion this year.
Out of the total, P108.4 billion came from the sale of long-term debt papers, while P2.12 billion was acquired through short-term IOU offerings.
National Treasurer and Monetary Board member Rosalia de Leon previously stated that the government needs to borrow money because its spending outweighs its revenue collections.
Not all the money the government borrows goes toward closing the budget gap. Some of it is used to pay off past debts, including interest.
The Maharlika Investment Fund, which will be in full swing before the end of the year, opens a third alternative for financing outside of tax revenues and borrowings.
