BSP approves $10.3-B foreign government loan by 2022

The Bangko Sentral ng Pilipinas (BSP) has approved a total of $10.32-billion worth of foreign loans in 2022, lower by 21.43 percent compared to $13.14 billion in the domestic market.

In the last quarter of 2022, the BSP’s policy-making body, the Monetary Board, approved $2 billion in foreign loans, down 32.95 percent from the same period in 2021 to $2.98 billion. . This is the issuance of bonds by the Government of the Philippines to finance the general financing of the Government (NG).

Last year, the government loans reviewed and approved by the BSP included: three bonds worth $4.77 billion; seven loans totaling $4.68 billion; and three loans of $870 million.

BSP buildings and logos/Reuters

The central bank noted that in 2022, the issuance of bonds was lower compared to $6.16 billion in 2021. Bond funds fell by 22.50 percent last year.

Program loans decreased by 77.52 percent in 2022 from $ 3.88 billion in 2021, while loans increased by 50.96 percent from $ 3.10 billion in 2021.

Government borrowing in 2022 will finance NG’s expenditures for the following: general financing needs of $4.77 billion or 46.22 percent of the total; and transportation works of $3.63 billion or 35.20 percent of the total amount.

Loans will also go to the Covid-19 pandemic response projects and programs of $1.35 billion or 13.09 percent of the total, and other development projects of $570 million or 5.49 percent of the total.

To ensure that the external debt will continue to be managed, the BSP is mandated to review and approve all external debt of the Government or the Government under Section 20 , Article VII of the 1987 Philippine Constitution.

The BSP reiterated that it “enforces the proper use of resources and ensures that external debt needs are at manageable levels, to support the sustainability of external debt.”

By the end of September 2022, the country’s foreign debt increased by 1.87 percent or almost $2 billion to $107.91 billion from $105.93 billion in the same period in 2021.

The level of external debt is still higher than the reduction of the country’s international reserves (GIR) of $96.1 billion at the end of 2022.

Meanwhile, the rate against the domestic product (GDP) fell to 26.8 percent compared to 27.3 percent in the same period in 2021.

According to the BSP, the “low” level of debt to GDP is a sign of solvency, which indicates the country’s “remaining strength in servicing foreign loans at a moderate level and the length”.

“The ratio remains one of the lowest when compared to other ASEAN countries,” said the BSP.

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