Wednesday, March 23, 2005

Gov’t borrowings overshoot 128%

The government stepped up the pace of its borrowings in the first two months, accumulating so much debt this surpassed the first-quarter quota by 128 percent to P99.7 billion instead of only P77.65 billion as planned.

This performance highlighted the fiscal concerns of such institutions as the International Monetary Fund (IMF) or the international rating agencies that would rather the government stepped up its revenue generation instead.

There is fear the weak revenue stream would aggravate further an already imperiled public sector and launch a cycle of borrowings that could bring the entire economy to perdition just a few short years from now.

The IMF wanted a front-loading or the stepping up of the fiscal consolidation program of government “so as to send a strong signal to markets about (its) commitment to tackling the fiscal problem” and bring this about, for instance, by raising the value-added tax (VAT) rate.

This year's two-month borrowings of P99.7 billion was 320 percent higher than year ago borrowings of only P23.7 billion.

Finance Secretary Cesar Purisima was forced to borrow this much money from foreign and local lenders because the main collection arms had revenues of only P113.149 billion even as public spending accelerated to P153.202 billion.

This compared with last year's spending totaling only P132.311 billion.

As a result, the government posted a P40.053-billion budget shortfall in the first two months, almost 16 percent higher than a year ago.

Purisima acknowledged financing goals were exceeded for the period on a net basis.

He said foreign borrowings for the period totaled P69.2 billion with the issuance of 25-year global bonds that raised $1.5 billion from overseas investors.

Locally, only P30.5 billion worth of IOUs, mostly in the form of Treasury bills (T-bills), helped them meet maturing debts during the period.

These activities resulted in a gross financing mix in which 56 percent represented foreign borrowings and only 44 percent were locally obtained.

Purisima provided an incomplete picture of the government's spending program for the period in which P56.862 billion represented interest payments while another P23.945 billion was the allotment to local government units.

Net lending for the period totaled P1.63 billion.

On the revenue side, the Bureau of Internal Revenue collected P73.694 billion, almost 13 percent higher than a year earlier.

The Bureau of Customs also surpassed last year's collection by more than 8 percent to P19.783 billion from P18.215 billion.

The Bureau of Treasury also collected P13.104 billion or nearly 55 percent higher than year ago level of only P8.475 billion.

Other offices of government collected P6.568 billion, 15 percent higher than year ago of only P5.5684 billion.

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