The government may borrow by as much as P40 billion from the domestic market this year to cover the planned additional spending of at least P75 billion.
This as the government has set aside its balanced budget goal this year due to the difficult economic landscape brought about by skyrocketing oil and food prices.
The government plans to incur a deficit of P75 billion to be able to spend more on infrastructure and social services.
Finance Undersecretary Roberto Tan said the government is looking at borrowing an additional $500 million to $750 million this year or an equivalent of P35 billion from foreign sources.
Tan said the balance would be sourced from the domestic market through over-the-counter sale of Treasury bills and Treasury bonds and through the auction of government debt papers.
The government’s auction committee is now reviewing whether it would again issue 91-day and 182-day Treasury bills (T-bills) starting in the third quarter of the year if there is market appetite again.
It has not issued 91-day and 182-day debt papers since the start of the second quarter due to a lack in demand.
For the additional foreign borrowing of $500 to $750 million, Tan said this would be sourced through commercial sources and official development assistance (ODA) loans.
The government had planned to borrow 70 percent of its financing needs from domestic sources and 30 percent offshore.
The government had programmed to borrow $1.5 billion in ODA loans this year or $900 million for program loans and $600 million for project loans.
The Philippines has already borrowed $500 million this year through a global bond offering in January.
Every year, the National Government has to borrow to refinance maturing obligations. Maturing foreign obligations are normally paid in dollars and since it is still in deficit, the government ordinarily borrows offshore to meet these obligations.