Finance Secretary Carlos Dominguez III
MANILA – The government considers the credit line provided by the Bangko Sentral ng Pilipinas (BSP) as among its reserved funding options since commercial borrowing remains the priority.
“We believe that our current borrowing program and our current revenue flow, which incidentally is 8 percent over our latest estimates for tax revenues is going to hold us a bit. We’re keeping the balance of credit line with the central bank in reserve,” Finance Secretary Carlos Dominguez III said in an interview over Bloomberg television Wednesday.
The BSP has extended a PHP300-billion credit support to the national government last March through a repurchase deal for the acquisition of government securities. This was settled last September 29.
The central bank’s policy-making Monetary Board (MB) approved last October 1 the national government’s request for a PHP540-billion provisional advance, which BSP Governor Benjamin Diokno earlier said “is targeted to be released (in the) first week of October 2020.”
The central bank’s Charter authorizes the BSP to extend financial aid to the national government with an amount that is equivalent to 20 percent of the latter’s average revenues in the last three years, which to date is about PHP540 billion.
Dominguez said they are open to additional borrowings from the central bank to help fund 2021 programs.
“Well, as I said, we keep that in reserve. Our first option is to go back into the commercial market. But, you know, if the economy doesn’t perform as we expect, we will go back to them,” he added.
The government’s main revenue-generating agencies –the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC)– have exceeded their revised collection goals as of end-September this year.
Department of Finance (DOF) data show that BIR collections in the first three quarters this year reached PHP1.423 trillion, higher than the revised PHP1.31 trillion set by the inter-agency Development Budget Coordination Committee (DBCC) for the period.
Collections by the BOC during the same period totaled to PHP397.51 million, higher than the PHP372.15 billion set by economic managers.
These targets have been slashed on account of the impact of the pandemic.
Based on the DBCC ad referendum meeting last July 28, BIR’s revenue goal this year is now at PHP1.69 trillion, while BOC is at PHP506.15 billion.
The borrowing program for this year has been set to be around PHP3 trillion, the bulk of which will be sourced domestically at around 75 percent of the total.
Of the total commercial foreign loans this year, EUR 1.2 billion came from the issuance of three and nine-year papers last January, and USD2.35 billion from the sale of 10-year and 25-year bonds last April.
Dominguez remains optimistic about strong domestic recovery next year, citing the gains from the tax reforms instituted by the current administration since 2016.
He said the government will not introduce new taxes this time to counter the expected drop in revenues.
Dominguez also discounted the sale of government assets which, he said, are mostly in real estate and mining operations.
“We are not that desperate yet,” he added. (PNA)
