Foreign borrowings approved by the Bangko Sentral ng Pilipinas (BSP) jumped by more than 40 percent in 2023 after declining for two straight years, as the national government borrowed more from offshore creditors primarily to bankroll key infrastructure projects.

Data released by the central bank yesterday showed foreign borrowings approved by the BSP amounted to $14.49 billion in 2023, $4.17 billion higher than the $10.32 billion obtained in 2022 from foreign lenders.

The BSP attributed the increase to the rise in program and project loans that offset the decrease in global bond issuances. The regulator approved 24 medium to long-term borrowings in 2023.

National government borrowings via global bond issuances declined by 16.1 percent to $4 billion in 2023 from $4.77 billion a year ago.

On the other hand, the central bank also approved 12 project loans worth $5.67 billion in 2023, a 21-percent jump from $4.68 billion in 2022.

Likewise, the BSP also approved 10 program loans amounting to $4.82 billion, 5.5 times the $870 million approved in 2022.

About 28 percent or $40.07 billion of BSP-approved foreign borrowings in 2023 will be used to fund infrastructure projects particularly transportation, while 27.6 percent or $4 billion will be used for general financing requirement.

The central bank also said that 21 percent or $3.07 billion would finance economic recovery and development, environmental protection and climate resilience projects and programs.

The government also allocated 15.6 percent or $2.27 billion to pursue COVID pandemic response projects and programs, while six percent or $880 million will finance agriculture projects and 1.4 percent or $210 million will be for education projects.

For the fourth quarter of 2023 alone, BSP-approved foreign borrowings surged by 65.8 percent to $3.32 billion from $2 billion in the same quarter in 2022.

All foreign loans to be contracted or guaranteed by the government needs prior BSP approval under Section 20, Article VII of the 1987 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 commencement of actual negotiations as mandated by the Letter of Instructions 158 issued in January 1974.

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

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

The country's budget shortfall narrowed by 10 percent to P1.1 trillion from January to November last year compared to P1.24 trillion in the same period in 2022.

A narrower budget deficit still means the government is spending beyond what it earned from revenue collections, although at a significantly slower pace.

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