Finance Secretary Carlos Dominguez III said on Tuesday the government’s borrowings from January to April 2020 reached P1.22 trillion, surpassing the P1.02 trillion the country borrowed for the entire 2019.

The higher borrowings this year, Dominguez said, was due to the “unexpected” economic shocks brought by the Covid-19 pandemic and the Taal Volcano eruption earlier this year.

“The government has had to increase spending to implement its ‘Four-Pillar Socioeconomic Strategy’ against Covid-19 even as strict mobility restrictions that national and local governments imposed since March to suppress the coronavirus’ spread had curtailed economic activity and led to a sizable drop in the state’s revenue intake,” Dominguez explained.

The government’s “Four-Pillar Socioeconomic Strategy” against Covid-19 consists of (i) emergency support for vulnerable groups and individuals; (ii) marshalling of resources to fight COVID-19; (iii) fiscal and monetary actions to finance emergency initiatives and keep the economy afloat; and (iv) an economic recovery program focused on getting businesses back on their feet to sustain and create jobs, the Department of Finance (DOF) said.

It will cost P1.74 trillion or 9.1 percent of gross domestic product.

Dominguez cited a Treasury report that revealed that about P982 billion, or 81 percent of the new borrowings, was sourced domestically.

The amount was raised through treasury bills and bonds and a P300-billion short-term loan from the Bangko Sentral ng Pilipinas, the DOF said.

The remaining P237 billion or 19 percent of the total was sourced externally through a mix of concessional foreign loans and bond issuances.

“While the government is borrowing more than usual this year in order to fund healthcare, social protection and other essential programs while our revenues are down, we have to be careful about spending too much above our means,” Dominguez said.

“None of us knows how long this pandemic will last. As we have borrowed a lot– P1.22 trillion in just four months, to be exact–fiscal space should be saved to afford us elbow room in case future circumstances require a new round of big healthcare spending, subsidies and/or stimulus programs,” the DOF chief added.

The economic team earlier reported that its target budget deficit of 9 percent, which takes into account the administration’s proposed stimulus measures, would place it at the median of the Philippines’ peer group.

This should hold true whether the country was compared to countries in East Asia and the Pacific, to its Association of Southeast Asian Nations neighbors, or to countries with credit ratings in the “BBB” to “A-” range, the DOF said.

The Japan Credit Rating Agency last week upgraded the country’s credit rating from “BBB+” to “A-” with a “stable” outlook.

“Loans are not free money,” Dominguez said. “Hence, it is an imperative that we limit state spending to a manageable and sustainable level equivalent to a 9-percent budget deficit.” John Ezekiel J. Hirro