BSP reviews 6 proposed foreign loans of gov't

BSP reviews 6 proposed foreign loans of gov't

By LEE C. CHIPONGIAN

March 5, 2011, 11:53pm

 MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) is reviewing six proposed National Government foreign loans worth $1.45 billion for release and implementation this year.

The government has a borrowing requirement of $4 billion, of which $2.5 billion is the approved amount by the BSP to raise from sale of ROPs and other bonds for budgetary support. About $1.5 billion including project loans of $44 million are the official development assistance loans allotted for 2011.

These foreign borrowings are submitted to the central bank for assessment and review, such as rates, concessions and impact on general funding of the state.

Based on central bank documents, the list of proposed NG borrowings for this year are: the $300 million Governance and Justice Reform Program, the $250 million Investment Climate Program, the $250 million Disaster Risk Management Financing, the $250 million Financial Market Regulation and Intermediation Program, the $250 million Development Policy Loan and the $155 million National Program Support Loans.

The lone $44 million project loan was not identified.

For this year the BSP expects public and private sector foreign borrowing to reach $20.5 billion, 56.2 percent higher than last year. Half of which are private sector loans, estimated to reach $10.1 billion this year primarily for the public-private infra programs.

The BSP in a report said $20.5 billion amount is based on the borrowing plans submitted by both the government and corporate entities, loans approved in principle last year and pending loan applications as of the end of December.

The central bank has a foreign loan ceiling of $10.5 billion this year so half of the expected external borrowing will be charged to the ceiling.

Of the expected foreign loans, the government or public sector will contribute 51 percent of total or $10.4 billion with the National Government planning to borrow $4 billion this year. The NG will account for 38 percent of the total public sector borrowing requirements, of which about $2.5 billion are commercial loans, $1.45 billion are program loans and only $44 million are project loans. Last January 5, the NG borrowed $1.2 billion of the $2.5 billion commercial loans to fund budgetary requirements.

Last year, the central bank approved total foreign loans of $10.3 billion and 62.2 percent or $6.5 billion were charged against the ceiling, which was originally set at $12.7 billion but later was reduced to $10.5 billion.

The government borrowed $9.3 billion foreign loans in 2010 and $1 billion from the private sector. According to the BSP document, the loans approved last year were all medium to long-term in nature, with maturities ranging from 10 to 40 years and weighted average maturity of 16.5 years, higher than 2009's 14 percent. The central bank said this could be due to the increase in the issue size of Philippine bonds with 24- to 25-year maturity.

Last year, in terms of currency mix, the BSP approved $5.8 billion of total foreign loans in US dollar, $2.3 billion in Japanese yen, $1 billion in Philippine peso and $221 million in Euro.