MB-approved foreign borrowings rise 69%

THE Bangko Sentral ng Pilipinas (BSP) Monetary Board announced on Wednesday that it has approved a total of $4.80 billion of public sector foreign borrowings in the first quarter of 2022, 69 percent up from the $2.84-billion approvals in the same period in 2021.

Broken down, the borrowings consist of one bond issuance amounting to $2.25 billion; and three project loans aggregating $2.55 billion.

Under the 1987 Constitution, prior approval of the BSP, through its MB, is required for all foreign loans to be contracted or guaranteed by the Republic of the Philippines.

Similarly, Letter of Instructions No. 158 dated 21 January 1974 also requires all foreign borrowing proposals by the NG, government agencies and government financial institutions to be submitted for approval-in-principle by the MB before commencement of actual negotiations.

The BSP said the first quarter borrowings are slated to fund the following: the national government’s general budget financing requirements ($2.25 billion); transportation ($2.08 billion); Covid-19 pandemic response ($300 million); and infrastructure ($175.10 million).

“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.

Just this week, the government successfully returned to the Samurai market with its JPY 70.1 billion offering of multi-tranche 5-year, 7-year, 10-year, and 20-year Sustainability bonds (“the Bonds”) with an Environmental, Social, and Governance (ESG) label across all four tranches.

This is the first ever ASEAN Sustainability bond transaction issued by the Philippines in the Samurai bond market, and follows the previous successful issuance of a 25-year Sustainability bond last March 2022 in the USD market.

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