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Central bank sets Sept. 30 deadline for foreign borrowing plans

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THE BANGKO SENTRAL ng Pilipinas (BSP) has given the government and businesses until next month to submit their offshore borrowing plans for 2019.

In a public advisory, the BSP announced that all public and private entities must submit their foreign borrowing plans to the monetary authority by Sept. 30.

“In line with the responsibility of the Bangko Sentral ng Pilipinas to monitor capital flows and analyze their implications on the economy, an annual survey is conducted to get an indication of the magnitude and timing of the economy’s financing requirements for the following year, as well as the purpose of such borrowings, among others,” the central bank said in the advisory published in the newspapers earlier this week.

The BSP wants all firms and government departments and agencies to submit their medium- and long-term financing strategies which will be raised from foreign sources.

This covers loans from global banks and capital infusions by parent companies, affiliates and shareholders overseas. It also covers plans to issue debt papers to foreign investors, in order to support their operations for 2019 and beyond.

The BSP should also be notified by companies that plan to sell debt instruments onshore that will be denominated in the dollars or other foreign currencies.

All 2019 foreign borrowing plans and schedules must be submitted to the BSP’s International Operations Department.

The country’s total foreign debt reached $73.196 billion as of end-March, slightly more than the $73.098 billion incurred as of end-2017, according to latest available central bank data.

Bulk of outstanding offshore loans — some $32.523 billion — is held by the national government, while roughly a fourth of the debt stock — $19.537 billion — is held by non-financial companies.

More than 80% of external debt is due in more than one year, a share deemed “manageable.”

These debts also accounted for just 23% of gross domestic product (GDP) as of March, marking a record low for the Philippines.

On the other hand, dollar reserves held by the BSP amounted to $76.722 billion as of end-July and could cover 6.1 times the country’s external debt falling due in 12 months.

The national government borrows from local and foreign sources to fund the planned increased spending on infrastructure and social services and boost economic activity.

The state plans to borrow a total of P888.23 billion this year to plug its budget deficit, with 35% of the sum to be sourced abroad.

Earlier this month, the Bureau of the Treasury raised ¥154.2 billion (about $1.39 billion) from Japanese investors by selling “samurai” bonds for the first time in eight years. The state also raised $2 billion from a global bonds sale in January, with half representing new money and the other $1 billion to pay existing debts. The government also issued $230 million worth of renminbi-denominated papers to Chinese investors in March.

The Treasury aims to raise P297.2 billion from foreign creditors as part of its P1.189-trillion 2019 borrowing plan.

Private companies in the country also tap foreign capital markets to raise additional funding to support operations and expansion plans, while diversifying their debt sources in a bid to reduce costs and manage risks. — Melissa Luz T. Lopez