BSP okays gov’t-proposed $3.81-B foreign loans in Q3

The Bangko Sentral ng Pilipinas (BSP) has approved $3.81 billion in foreign loan proposals by the government in the third quarter, higher by 36 percent from the $2.81 billion recorded in the same period last year to fund environmental, maritime and agricultural projects.

Breaking it down, the proposed foreign loans comprise of a a bond issuance worth $2.5 billion, two project loans amounting to $535.97 million, and a program loan worth $778.59 million.

In a statement released Tuesday, the BSP said proceeds from the bond will fund the National Government’s general budget and refinancing of assets aligned with the Philippines’ Sustainable Finance Framework.

In May, the Department of Finance (DoF) through the Bureau of the Treasury issued 25-year global bonds, the second round of such bond issuance this year and the government’s fifth G3 ESG (environmental, social, governance) bond offering issuance.

ESG bonds

From March 2022 to January 2023, the DoF said the government has already issued ESG bonds amounting to $3.55 billion for reforestation and flood-control projects.

Meanwhile, other loans green-lit for the third quarter this year will fund maritime safety projects amounting to $448.41 million, agrarian reform projects worth $87.56 million, and climate resilience projects worth $778.59 million.

Under Article VII of the 1987 Constitution, the BSP must approve all foreign loans that the government may incur before it proceeds to negotiations with lenders to ensure efficient debt management.

Judicious use of resources

“The BSP promotes the judicious use of the resources and ensures that external debt requirements are at manageable levels, to support external debt sustainability,” the central bank said.

The DoF plans to borrow a total of P2.57 trillion this year, of which 25 percent will come from external sources. As of June, the DoF said the country’s gross financing stood at 61 percent.

External debt rose by 3.5%

As reported by the Bureau of the Treasury, the national government’s external debt increased by 3.5 percent to P160.25 billion as of August, representing 30.6 percent of all borrowings worth P15.55 trillion.

DoF Secretary Ralph Recto said the government is also eyeing offering samurai or Japanese yen-denominated bonds this year depending on interest rate movements.