The government could wind down its commercial borrowings in 2021 on the diminishing impact of the coronavirus pandemic on its finances, S&P Global Ratings said on Tuesday.
In its latest report, the New York-based credit rating agency estimated that the government’s gross commercial long-term borrowing this year could ease to $32.3 billion or about P1.56 trillion this year.
Based on the latest Bureau of the Treasury data, S&P’s forecast is lower than the P2.74 trillion in gross financing of the government last year.
“Although the [fight] against Covid-19 continues in 2021, its burden on government finances is likely to be lower,” it said.
The rollout of Covid-19 vaccines in many countries “should allow governments to rein in the disease and lower the infection rates globally sometime this year,” the debt watcher added.
After lagging behind its Southeast Asian neighbors, and even countries like Ghana and Zimbabwe in procuring vaccines, the government finally began inoculating some government officials and health workers on Monday after Beijing-donated doses of China’s Sinovac arrived in the Philippines the day before.
After “having had about a year of experience dealing with the pandemic, most governments are better poised to limit the brunt of containment measures on their finances,” S&P said.
While the government is yet to release its gross financing program for this year, the Department of Finance has said its International Finance Group targeted to borrow $23.71 billion from foreign sources to bridge the budget deficit and fund priority projects.
Of this amount, $8.06 billion (34 percent) will be used as budget support and $15.65 billion (66 percent) for project financing.
“We are planning to source a total of $7.67 billion in loans and grants from multilateral institutions; $10.54 billion from our bilateral partners; and raise $5.5 billion from the commercial markets this year,” Finance Undersecretary Mark Dennis Joven said earlier.
S&P also said the projected borrowings would bring the country’s total commercial debt to $200 billion, or about P9.71 trillion at end-2021.
This is lower than the government’s P9.79 trillion in outstanding debt last year, or 54.5 percent of the Philippine economy.
Finance Secretary Carlos Dominguez 3rd has said the government remained committed to exercising prudent fiscal and debt management, even as it starts spending big on pandemic-response measures to revive the economy, and restore business and consumer confidence.