Finance officials said over the weekend that the government wanted to reduce its CPSD as quickly as it can to at most 2.5 percent and the budget deficit to zero by 2010.
"When we have achieved that, then we will go back to our donors and use the ODA funds to refinance maturing foreign debt because by then we would have the funds for the projects," Purisima said.
In effect, Purisima said that instead of borrowing in foreign currency from commercial sources in order to refinance its maturing foreign debts, the government would be able to use ODA currency for debts and the peso proceeds could come out of the national budget.
Purisima added that since ODA funds are typically cheaper than commercial loans, the government would be generating savings in terms of cost of money.
The consolidated public deficit for 2005 is expected to go down to P203.865 billion from P263.217 billion in 2004 as the Arroyo administration anticipated the impact of its revenue measures.
Data from the DOF showed that the consolidated public sector financial position would be better than expected in 2005 and the deficit would be less than originally projected.
In 2004, the CPSD was 5.4 percent of gross domestic product (GDP), with the total public sector borrowing requirement reaching P295.449 billion.
This year, the DOF originally estimated that the CPSD would reach P253.632 billion equivalent to 4.8 percent of GDP and the PASB would reach P294.764 billion.
According to the DOF, however, the revised estimates indicated that CPSD this year would be only P203.865 billion equivalent to 3.8 percent of GDP and the PSBR would reach only P240.878 billion or 4.5 percent of GDP.
Despite the gradual reduction, however, the Arroyo administration was still canceling ODA projects because it had no funds to for counterpart funding.
The National Economic and Development Authority (NEDA) is planning another review of all existing ODA projects that could lead to the cancellation of more projects funded by foreign loans.