[ad_1]
Government debt briefly reduced from record after payment of BSP P300-B
Ian Nicolas Cigaral (Philstar.com) – October 29, 2020 – 6:37 pm
MANILA, Philippines – September marked a slump in mounting government debt after liabilities to the central bank were settled, a temporary relief that risks reversing this month with fresh cash from Bangko Sentral ng Pilipinas (BSP).
Outstanding debt fell from an all-time high and fell to P9.37 trillion last month, 2.6% less than the August level, the Treasury Office reported Thursday.
The decline was a direct result of the Duterte administration repaying the P300 billion BSP placements in Treasury bonds after maturity. That amount was invested in March to give cash to the government for 3 months, but it was updated for another quarter following the law.
The liquidation of the BSP quotas easily subtracted 4.1% from the value of internal debts which fell to P6.54 trillion last month. The central bank lending was recorded as a direct loan that plummeted to just P156 million after the liquidation.
That said, the decline is likely to be brief. As soon as it returned the P300 billion BSP invested on September 29, the government applied for new loans worth P540 billion from the monetary authorities, this time in the form of advances, that is, direct infusions of cash instead of investing. the money in bonds.
Additionally, most other forms of liabilities continued to rise last month, in line with the Duterte administration’s reliance on debt to raise cash for a costly pandemic response, while funding typical state operations. As it stands, the government projects the debt pile to grow to P10.16 trillion by the end of the year.
For example, debt channeled through Treasury bills and bonds, which are issued weekly, rose 0.4% month-on-month to P6.44 trillion, the data showed. Assumed loans were stable at P792 million.
External debt posted a faster increase of 1% in September from August to P2.93 trillion. In this segment, external loans obtained from other countries or multilateral institutions such as the World Bank and the Asian Development Bank increased 2.6% faster to P1.27 trillion.
Meanwhile, in the absence of a foray into the foreign bond market, the value of foreign currency denominated securities fell 0.2% monthly to P1.66 trillion. Broken down, 98.6% or P1.28 trillion of these bonds were denominated in US dollars.
The balance was shared by bonds in euros, yen, yuan and global pesos, the figures showed.
The government generally borrows from local and foreign investors to cover its budget deficit and pay old installments. But this year, liabilities soared after the pandemic broke down with budget plans that did not foresee the health crisis reducing tax revenues for closed businesses and stay-at-home consumers this year.
[ad_2]
