The public sector's foreign borrowings approved by the Bangko Sentral ng Pilipinas (BSP) went down by 48 percent to $2.87 billion in the first quarter from $5.56 billion recorded a year ago.

The BSP approved two project loans worth $850 million and two program loans amounting to $2.02 billion from January to March.

'These borrowings will fund the national government's projects on infrastructure ($850 million) and programs on policy reforms in health care ($910 million), digital transformation ($410 million), tax administration ($400 million) and inclusive finance development ($300 million),' the BSP said.

All foreign loans to be contracted or guaranteed by the government need prior BSP approval as mandated by the Constitution.

Likewise, all foreign borrowing proposals by the national government, government agencies and government financial institutions have to be submitted for approval-in-principle by the Monetary Board before the commencement of actual negotiations, as mandated under Letter of Instruction 158 issued in January 1974.

Last year, foreign borrowings approved by the BSP surged by 40.36 percent to $14.49 billion from $10.32 billion in 2022 due to higher program and project loans, which offset the decrease in bond issuances.

'The BSP promotes the judicious use of the resources and ensures that external debt requirements are at manageable levels, to support external debt sustainability,' the BSP said.

The national government borrows heavily from foreign and domestic creditors to finance the country's budget deficit as the government spends more than what it actually earns.

The country's budget shortfall has ballooned as the pandemic-induced recession pulled down revenue collections, while spending soared to finance crisis-response measures.

The government seeks to reduce the budget deficit to just 3.7 percent of gross domestic product by 2028, down from the record-high 8.6 percent in 2021.

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