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The government may have to increase its borrowing this year if revenue collection continue to drop below the 2007 targets.

Finance officials said they are monitoring the performance of the government’s revenue-generating agencies, particularly the Bureau of Internal Revenue (BIR).

National Treasurer Omar Cruz told reporters yesterday that despite the revenue shortfall in the first four months of the year, the revenue collection is still on track.

However, Cruz said finance officials are not ruling out the possibility of a slip that would mean a possible increase in total borrowings for the year in order to bridge the budget gap.

“If  revenue continues to fall below target, then obviously we will borrow more,” Cruz said. “We’re still on track but that’s something we have to assess on a regular basis.”

The BTr is scheduled to announce its third quarter borrowing program in the next two weeks, reflecting possible adjustments given the government’s revenue performance in the first five months of the year.

Under the 2007 budget, the government’s total domestic borrowing was programmed at P208 billion, broken down into P20 billion worth of Teasury bills (T-bills) and P188 billion worth of Treasury bonds (T-bonds).

“This level of borrowing is in keeping with the programmed deficit of P63 billion and still based on the programmed borrowing ratio of 33 percent foreign and 67 percent domestic,” Cruz said.

Total foreign borrowing for 2007, on the other hand, would amount to $2.5 billion including ODA loans, as the government’s borrowing needs also dropped as a result of declining budget deficit.

The government said it has firm commitment for about $850 million worth of program loans and $616 million project loans that would come from donor countries and multilateral funding agencies.

Cruz said early on, however, that the 2007 borrowing program could still change as the year progressed.

The Department of Budget and Management earlier reported that the bulk of the 2007 domestic borrowing would be used for principal amortizations.

The DBM had estimated that interest payments are projected to decline by P21.8 billion in 2007, totaling P318.2 billion.

For the second quarter, the BTr planned to borrow P62 billion from the domestic credit market with total T-bill offers originally amounting to P32 billion while treasury bond offers are programmed to amount to P30 billion from April to June.