NG gross borrowings surge in July

By Justine Irish D. Tabile, Senior Reporter

THE NATIONAL GOVERNMENT’S (NG) gross borrowings surged in July, reflecting the timing and front-loading of debt issuances to finance its deficit and maturing obligations, analysts said.

Data from the Bureau of the Treasury showed that the total gross borrowings jumped by 75.4% to P291.375 billion in July from P166.107 billion in the same month in 2025.

Domestic debt, which accounted for 93.1% of the total gross borrowings for the month, reached P271.321 billion. This was a 77.9% increase from P152.54 billion in July 2025.

Domestic borrowings consisted of P133.2 billion in net Treasury bill issuances and P138.121 billion in fixed-rate Treasury bonds.

On the other hand, gross external borrowings jumped by 47.81% to P20.054 billion in July from P13.567 billion a year earlier.

External financing during the month consisted of P18.641 billion in new project loans and P1.413 billion in program loans. There were no global bonds in July.

“The sharp increase in July borrowings likely reflects a combination of financing requirements and the timing of debt issuances and refinancing activities,” Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion said in a Viber message.

“The National Government may have also taken advantage of available market liquidity to secure funding and pre-fund part of its requirements,” he added.

However, Mr. Asuncion said that monthly borrowing figures can be volatile as these are influenced by issuance schedules, refinancing needs, and prevailing market conditions, which can result in large year-on-year swings.

“The large increase in NG borrowings over July reflects the government’s multiple spending fronts,” University of Asia and the Pacific Economist Marco Antonio C. Agonia said in an e-mail.

“NG took on more debt ahead of the fourth-quarter infrastructure rush, to fund social assistance programs for cushioning the effects of the Middle East war, and for repayment of existing liabilities,” he added.

Ser Percival K. Peña-Reyes, a senior research fellow at the Ateneo Center for Economic Research and Development, said that the increase reflects “a financing calendar and debt-management effect, rather than a sudden 75% deterioration in the fiscal position.”

“One could interpret the July surge as mostly a timing/composition story layered on top of a structurally large financing requirement,” he said.

“Gross borrowing counts funds raised and then later used to refinance maturing debt. What matters for the government’s fiscal health is more closely related to the deficit, net borrowing, interest burden, and debt-to-gross domestic product trajectory,” he added.

SEVEN-MONTH FINANCING
In the January-to-July period, NG gross borrowings rose by 20.2% to P2.113 trillion from P1.758 trillion a year earlier.

Domestic debt went up by 15.4% to P1.548 trillion from P1.341 trillion a year prior. This accounted for 73.27% of the total borrowings in the seven-month period.

Domestic borrowings consisted of P1.157 trillion in fixed-rate Treasury bonds and P390.901 billion in net Treasury bills.

External borrowings in the first seven months jumped by 35.8% to P564.856 billion from P415.918 billion a year ago. This was composed of P314.371 billion in global bonds, P157.607 billion in program loans, and P92.878 billion in new project loans.

Mr. Asuncion said he expects more borrowing activity in the next five months.

“Borrowing activity is likely to remain relatively elevated throughout the rest of the year as the government continues to finance its fiscal deficit, fund priority expenditures, and refinance maturing obligations,” he said.

“However, the pace may vary depending on revenue collections, expenditure execution, and market conditions,” he added.

For the January-to-July period, the fiscal gap widened by 13.85% to P893.1 billion from the P784.4-billion deficit last year, representing 53.84% of the upwardly revised P1.659-trillion program approved by the Development Budget Coordination Committee (DBCC) in May.

Mr. Agonia also expects borrowing levels to remain elevated “but within manageable levels, as NG needs some room to pump-prime the economy.”

“Elevated yields associated with higher risk premia from existing geopolitical and fiscal sustainability uncertainty in advanced economies may likewise add upward pressure on financing requirements,” he added.

Meanwhile, Mr. Peña-Reyes said he expects borrowings to stay active but at a slower pace.

“The bigger issue is not necessarily another surge in gross borrowing. It is whether continued heavy issuance puts upward pressure on domestic yields and eventually raises the government’s interest burden,” he added.

BORROWING PROGRAM
With gross borrowings as of end-July already equivalent to about 77% of the P2.734-trillion full-year program approved by the DBCC in May, Mr. Agonia said there is a chance the government goes beyond the program if there are unexpected shocks.

“In our view, the two most salient risks are weather effects and interest rate volatility, where the government may have to face relatively expensive borrowing terms to fund climate damage mitigation programs as advanced economy yields run higher,” he said.

Meanwhile, Mr. Asuncion said that the government is still capable of staying within its planned financing framework.

“Borrowing activity is often uneven throughout the year, with issuances sometimes front-loaded to lock in funding and manage market risks,” he said.

He said the risks to this outlook include a wider-than-expected fiscal deficit, weaker revenue collections, additional spending requirements arising from economic or weather-related shocks, or higher refinancing needs.

“Absent these developments, the government remains on track to manage its financing requirements within the programmed borrowing level,” he added.

Mr. Peña-Reyes said it is highly probable that the Philippine government will stay within its P2.734-trillion borrowing plan, “as the heavy front-loading of debt issuance in the first half of the year is a standard fiscal strategy to lock in favorable interest rates and secure liquidity early.”

He also noted that the government typically scales back its debt auctions during the final four months of the year.

However, Mr. Peña-Reyes said slower revenue collections, higher social-assistance spending, foreign exchange volatility and unplanned infrastructure costs could push the government beyond its borrowing program.