The Bangko Sentral ng Pilipinas (BSP) has lowered the sub-ceiling for the foreign borrowing this year of the public and private sectors as they see more local currency loans to take advantage of low rates and the liquid domestic financial market.

 BSP sources said however that the limit for all government short-term foreign loans will be maintained at $300 million. The sub-ceiling of $500 million for medium-to-long-term loans is still under review.

The Monetary Board of the BSP has reduced from $8.5 billion to $5 billion the cap that the government or public sector and corporate or private sector can borrow as external loans for this year. To control the size of the country’s outstanding external debt, the BSP determines the foreign loan requirements of both the government and corporates and then decides on the annual ceilings on foreign loans.

Sources said the government has the bigger share of the external loans’ ceilings but any amount unutilized by the public sector can be transferred to the private sector.

The BSP and the government sets internal annual debt ceiling to monitor foreign borrowings from commercial sources, syndicated loans or from official development assistance funds.

The BSP has an ongoing review of its foreign borrowing policy in the context of its ceilings on medium and long-term loans.

After a board resolution in 2011, the BSP assessed the effectiveness of implementing a ceiling on the foreign loans of both the public and private sectors.

The BSP also monitor other foreign loans not registered or without BSP approval. Unregistered foreign borrowings are now allowed to source foreign currencies from the local banking system.

As of the end of the third quarter last year, the country’s external debt amounted to $61.7 billion, 1.12 percent lower year-on-year.

Its ratio to the size of gross domestic product as a measure of economic output has continued to decline to 25.6 percent compared to 2011’s 28.4 percent.