While the national government trimmed its borrowings in August, liabilities could rise again in the coming months as it moves to secure its remaining financing needs and ramp up spending to support economic growth, according to experts.
Latest data from the Bureau of the Treasury showed that gross borrowings reached P141.266 billion in August, down by 72.22 percent from P508.527 billion in the same month last year.
The sharp decline in borrowings was due to a high base effect from last year, when the government issued its 31st tranche of Retail Treasury Bonds and raised P507.16 billion, which drove up domestic financing that month.
Consequently, domestic borrowings plunged by 74.32 percent to P127.925 billion in August from P498.213 billion a year ago. This consisted of P125.160 billion in fixed-rate Treasury bonds (T-bonds) and P2.765 billion in net Treasury bills (T-bills).
The drop in domestic borrowing more than offset the 29.34-percent increase in external financing, mainly project loans, during the month, which rose to P13.341 billion from P10.314 billion a year earlier.
Despite the steep decline in its borrowings during the month, the government’s gross financing in January to August was broadly unchanged from a year earlier.
During the eight-month period, the government’s total gross borrowings reached P2.254 trillion, just 0.52 percent lower than the P2.266 trillion raised a year ago.
Domestic financing, accounting for the bulk of the government’s borrowing, stood at P1.675 trillion, 8.91 percent lower than the P1.839 trillion raised in the same period last year. This was made up of P1.282 trillion in T-bonds and P393.666 billion in net T-bills.
External borrowings, meanwhile, rose by 35.65 percent to P578.197 billion from P426.232 billion a year earlier.
This came after the government raised P314.371 billion in dollar-denominated global bonds and received P106.219 billion in project loans and P157.607 billion in program loans.
Borrowings could increase in the coming months as the government catches up on spending to pump-prime the economy and boost economic growth to cope with geopolitical risks, said Michael L. Ricafort, chief economist at the Rizal Commercial Banking Corp.
However, global bond yields are on the rise and could stay high into 2027, putting upward pressure on local bond yields, said ANZ Research in a note.
This could make borrowing costs for the government more expensive, as the research arm of Australia-based ANZ Banking Group Ltd. said the Philippines is particularly ‘most exposed’ to this external pressure in the near term.
‘The 2027 budget proposals recently released in Indonesia, Thailand, South Korea and the Philippines offer little respite, with refinancing needs, energy support measures and investment programs keeping issuance elevated,’ ANZ Research said.
‘Higher US dollar/peso exchange rate and local/global interest rates since the war on Iran/Middle East started since February 28, 2026 could [also] lead to higher debt servicing costs,’ Ricafort added.
The Treasury is set to offer on Tuesday its 32nd tranche of RTBs to retail investors, providing an avenue to park their funds while helping to fund the government’s programs and projects.
This is part of the government’s full-year borrowing plan of P2.733 trillion, of which P1.918 trillion will be sourced from domestic lenders while P815.505 billion will come from external sources.