Jul 122013

MANILA, Philippines – The national government has proposed a slightly lower borrowing program for next year, with the bulk still to be financed locally in a bid to take advantage of huge domestic liquidity, the National Treasurer said.

A total of P714.6 billion will be borrowed by the Aquino administration next year, 2.78 percent down from this year’s P735 billion, said Rosalia de Leon in a phone interview with The STAR on Friday.

“The borrowing mix will be 87 percent to 13 percent, in favor of domestic borrowings,” she said.

Broken down, funds to be raised in the domestic market will amount to P620 billion, a decline of 7.44 percent from the programmed P669.8 billion this year. 

“We still expect strong appetite for government securities even in terms of tenor. Definitely, we see strong demand in the long-end of the curve,” De Leon said.

Inflation is expected to remain benign, she explained, and thus that would drive investors to seek for higher yields which will be found in longer-termed papers.

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On the foreign market, De Leon said a total of P94.6 billion, equivalent to $2.2 billion, may be raised through bond flotations and official development assistance (ODA) from multilateral financial institutions. 

Of the total foreign financing, $1 billion may be sourced through offshore bond issuances, while the remaining amount of $1.2 billion may come from the World Bank and Asian Development Bank, among others.

The planned external borrowings for 2014 will mark the return of the Philippines in the foreign market after it decided to source all its financing needs locally this year.

“It will also depend on market appetite and market conditions and also on the cash flow of the government… We want to keep our options open,” De Leon said. 

In a speech at the 2013 Fixed Income Roadshow on Friday, the treasurer said the Aquino administration is boosting revenue collections next year to cap the budget deficit at two percent of economic output. 

Among others, tax evasion and smuggling cases will continue to be filed, she said, while reforms such as rationalization of fiscal incentives will be pursued. 

“If we see that we have a very strong cash flow, we may opt not to borrow on the latter part of (next) year,” De Leon said.

The Aquino administration bridges its budget deficit through onshore and offshore borrowings. For next year, the deficit is targeted to be capped at P266.2 billion.

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