Monetary Board approved $7.355 billion for development projects and programs in 2018

July 9, 2019

The Monetary Board (MB) approved public sector loans in 2018 amounting to $7.355 billion, higher by $3.869 billion  from the 2017 level of  $3.486 billion, as the national government raised spending on infrastructure development.

These public sector loans consisted of: $3.602 billion bonds;  12 project loans amounting to $2.853 billion; and three program loans amounting to $900 million, a statement from the Bangko Sentral ng Pilipinas ( BSP) Tuesday said.

These public sector borrowings will fund projects on transport connectivity (roads, railways, port and airport infrastructure), irrigation and agriculture development, flood management, and the reconstruction and development of Marawi City.

Out of the $7.355 billion total approved public sector loans, about  18 percent of loans or $1,359.61 million will fund five infrastructure flagship projects under the “Build, Build, Build” program, which seeks to accelerate infrastructure spending and generate robust economic growth and employment.

While public sector loans increased year-on-year, the country’s external debt position remains at prudent levels. 

At end-March, the Philippines’ outstanding external debt stood at $80.4 billion, up by $1.5 billion (or 1.9 percent) from the end-December 2018 level of $79 billion. 

Despite the rise in external debt, debt service ratio (DSR) has consistently remained at single digit levels.

The DSR stood at 5.1 percent as of  end-March 2019, well below the international benchmark of 20 to 25 percent. 

The DSR relates principal and interest payments (debt service burden) to exports of goods and receipts from services and primary income. It is a measure of adequacy of the country’s foreign exchange earnings to meet maturing debt obligations, the BSP said.

External debt ratio, or total outstanding debt expressed as a percentage of Gross National Income, slightly increased to 20 percent (end-March 2019) from 19.9 percent a quarter ago.

The ratio indicates the country’s sustained strong position to service foreign borrowings in the medium to long-term.  DMS