Monetary Board OKs $17.7B gov’t foreign loans in 2020

The Bangko Sentral ng Pilipinas’ (BSP) policy-setting Monetary Board (MB) has approved $17.7 billion worth of foreign loans secured by the Philippine government in 2020.

In a statement on Friday, the BSP said the public sector foreign loans approved by the MB consist of the  following:

•     three bond issuances ($6.6 billion)
•     15 project loans ($3.7 billion)
•     16 program loans ($7.5 billion)

The central bank said foreign borrowings approved last year were 82.5% higher compared to the 2019 figure of $9.7 billion.

This was due to higher bond issuances, which rose by 88.6% from $3.5 billion in 2019 to $6.6 billion in 2020; and surge in program loans by 435.7% from $1.4 billion in 2019 to $7.5 billion in 2020.

The central bank said the increase in public sector foreign borrowings in 2020 are, among others, to fund the government’s COVID-19 pandemic response programs and to support economic recovery.

Under Section 20, Article VII of the 1987 Constitution, prior approval of the BSP, through its MB, is required for all foreign loans to be contracted or guaranteed by the Republic of the Philippines.

Similarly, Letter of Instructions No. 158 dated January 21, 1974 also requires all foreign borrowing proposals by the national government, government agencies, and government financial institutions to be submitted for approval-in-principle by the MB before commencement of actual negotiations.

In the fourth quarter of 2020 alone, foreign borrowings by the government reached $4.2-billion, up 7%  from the $3.9-billon secured in the third quarter of last year.

The fourth quarter foreign loans consist of one bond issuance amounting to $2.8 billion; three project loans aggregating to $814.3 million; and two program loans amounting to $600.0 million.

These foreign borrowings will fund the national government’s general financing requirements for the last quarter ($2.8 billion); program/project loans in response to the COVID-19 pandemic ($700.0 million); disaster risk financing ($500.0 million); customs modernization ($88.3 million); and water transmission improvement ($126.0 million).

The BSP said it promotes the judicious use of the resources and ensures that external debt requirements are at manageable levels, to assure external debt sustainability.—AOL, GMA News