Foreign borrowings by the Marcos administration that had been approved by the Bangko Sentral ng Pilipinas (BSP) jumped 40.36 percent in 2023 compared with the previous year, with infrastructure projects receiving most of the fresh funds from new external debt.
In a report, the BSP said the Monetary Board (MB) allowed $14.49 billion in public sector foreign borrowings last year, higher than the $10.32 billion approved in 2022.
That amount will add up to the government’s growing debt pile, which bloated to P14.51 trillion as of November last year. In the final quarter of 2023 alone, the MB cleared seven new foreign loans by the government amounting to $3.32 billion, up by a hefty 65.8 percent year-on-year.
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 national government.
At the same time, all foreign borrowing proposals by the government—including those from agencies and state-run financial institutions—are required to be submitted for “approval-in-principle” by the MB before the start of actual negotiations.
Such an approval is required to promote the judicious use of the resources and ensure that external debt requirements are at manageable levels.
Breaking down the BSP’s report, the public sector foreign borrowings approved by the MB last year consisted of two bond issuances worth $4 billion and 12 project loans amounting to $5.67 billion. The MB also approved 10 program loans worth $4.82 billion.
In 2023, MB-approved program loans were 5.5 times larger than the preceding year, while project loans increased 21.2 percent. Those significant increases more than offset the 16.14-percent drop in offshore bond sales last year.
The BSP said 28.10 percent or $4.07 billion of the total offshore debts approved by MB in 2023 went to infrastructure projects. This, as President Marcos targets to supercharge infrastructure spending to 5 to 6 percent of gross domestic product.
Meanwhile, $3.07 billion or 21.16 percent went to projects and programs on economic recovery and development, as well as environmental protection and climate resilience.