Finance officials said economic planners have agreed to keep the National Government’s 2007 borrowing ratio at 33-67, with foreign borrowing accounting for a smaller portion of next year’s total borrowing.
National Treasurer Omar Cruz told reporters that more swaps are possible but the extent of conversion of existing foreign obligations to local borrowings would depend largely on how much money the government could raise from official development assistance (ODA).
According to Cruz, ODA sources would become a more significant part of the government’s fund-raising efforts since the fiscal position would now allow counterpart fnancing.
"We do have a play on how much we can max out ODA loans because those are, of course, cheaper than commercial loans," Cruz said. "But until we can get a commitment on how much ODA would be coming in, we cannot lay out how to approach our commercial borrowing."
The National Government is already in negotiations with the government of Japan for the 27th Yen Loan Package and there are at least $600- million worth of fresh program loans from the World Bank and the Asian Development Bank that were likely to fall under the 2007 budget.
In 2007, the National Government plans to reduce its budget deficit to P63 billion.
The increase in tax rates will allow the Arroyo administration to cut its programmed borrowing in 2007, a drop of 26.5 percent year-on-year.
The Department of Budget and Management (DBM) reported yesterday that there would be a dramatic drop in foreign borrowing but domestic borrowing would continue to increase.
Under the 2007 budget, total borrowing is projected to decline by P140.8 billion since part of the increase in the 2007 budget would be funded out of the increased government revenues from the adjustment in various tax rates.
The government had been forced to limit its 2006 spending to the re-enacted 2005 national budget but in 2007, the proposed budget would pass the P1-trillion mark, amounting to a total of P1.136 trillion.