The government will not scrap its foreign borrowings next year but will study a proposal by the Bangko Sentral ng Pilipinas (BSP) to borrow more domestically and temper the rapid appreciation of the peso against the dollar, Finance Secretary Margarito Teves said yesterday.
“The government is not scrapping foreign borrowings next year though we are looking into the proposal of sourcing more financing from domestic sources to help stem the sharp appreciation of the peso and partially address the concerns of exporters,” Teves said.
The BSP has been trying to temper the steady rise of the peso which is now trading at the 44-to-the-dollar-level. Analysts have predicted the peso’s rise to continue throughout the year and close at the 44-to-the-dollar level by yearend and 42-to-the-dollar level in 2008. On Monday, the peso closed at 44.05 against the greenback.
Exporters have been complaining against the rapid appreciation of the peso as this has been diminishing the value of their dollar earnings.
Teves, however, said there was a need to strike a balance between the needs of exporters and the government’s borrowing program.
“We will try to strike a balance between the need to help stabilize the peso and our own borrowing program based on opportunities that are presented to use,” Teves said.
He said that whatever action they decide to take, it would be advantageous to the government.
Finance Undersecretary Roberto Tan, in a separate interview with reporters, said the Philippines has foreign obligations that it needs to refinance.
Thus, this means that it cannot scrap its foreign borrowings for next year, he said.
“We will study the proposal. It will depend on our refinancing requirements but there are foreign obligations that we need to refinance. That’s our main consideration but we will look into the options,” Tan said.
For 2008, the government plans to borrow around $2 billion overseas from commercial and multilateral lenders or 19 percent lower than this year’s programmed overseas borrowings.
Last January, the National Government has raised $1 billion in 25-year global bonds.
The government has been trying to lessen its dependence on foreign borrowings as it tries to put its fiscal house in order. It plans to contain the budget deficit at P63 billion this year and totally wipe it out by the end of next year.