The Bangko Sentral ng Pilipinas (BSP) approved proposals for foreign loans in the first quarter at $6.29 billion, up by 119 percent from $2.87 billion in the same period last year.

The BSP said the national government sought more funds to implement various socio-economic programs and projects and repay maturing loans.

External borrowings in the first quarter included bond issuances amounting to $3.33 billion, five project loans worth $1.46 billion, and three program loans worth $1.50 billion.

“The program loans are meant to fund projects on economic development and finance initiatives, while the project loans will fund initiatives in the areas of transportation and infrastructure,” BSP said.

The Department of Economy, Planning and Development (DEPDev), which is formerly the National Economic and Development Authority, recently increased approved infrastructure flagship projects to 207 from 186.

Funding needs surge

This means higher funding requirements than the P9.6 trillion estimated for the previous total of 186 projects.

According to DEPDev, at least 81 projects will be funded by official development assistance which comes from foreign governments and bilateral and multilateral organizations, such as the Asian Development Bank and the World Bank.

Prior to the release of the BSP report on the government’s request for foreign loans in the first quarter, DEPDev Secretary Arsenio Balisacan said in December last year that he was urging government agencies to further accelerate proposals for infrastructure and other critical projects to maximize privileges from concessional loans.

DEPDev Undersecretary Joseph Capuno said this was important because the government has only two more years to avail of the concessional loans under official development assistance (ODA) once the Philippines moves up to an upper-middle income status.

“Once you graduate from a lower-middle-income country, you now lose your ODA privileges like subsidized or low interest rates,” Balisacan said.

For example, Capuno said Japan offers only a 0.1 percent rate, while South Korea requires 1.4 percent and a 10-year grace period.

Under the 1987 Constitution, the BSP Monetary Board must provide its approval to the national government before its officials negotiate terms for foreign loans.

“This is in line with the BSP’s tasks of ensuring that the country’s foreign debt remains manageable,” BSP said.