Monetary Board OKs $2.8-B public sector foreign loans in Q2

Bangko Sentral ng Pilipinas’ Monetary Board has approved a total of $2.80 billion of the public sector’s foreign borrowings in the second quarter of 2021.

But the BSP noted that the approved foreign borrowings was 59% lower than the $6.84 billion borrowed in the same period in 2020. 

According to the BSP, government’s external loans during the period consist of one euro-denominated bond issuance amounting to €2.10 billion, and one project loan amounting to $300 million.

“These foreign borrowings will fund the: (a) national government’s general financing requirements (€2.10 billion); and (b) COVID-19 pandemic response, covering vaccine procurement and distribution ($300 million),” the BSP said.

Under Section 20, Article VII of the 1987 Constitution of the Republic of the Philippines, prior approval by the BSP, through its Monetary Board, 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 Monetary Board before commencement of actual negotiations.

This constitutional provision, the BSP said, promotes the judicious use of resources and ensures that external debt requirements are at manageable levels, to support external debt sustainability. —Ted Cordero/LBG, GMA News