RP may tap Japanese debt market this year

MANILA, Philippines - The Philippines may tap the Japanese debt market this year to raise funds for its swelling budget deficit, Finance Undersecretary Gil Beltran said over the weekend.

Beltran said one option the government may consider is to sell Samurai bonds again, similar to what the government issued in 2000 during the time of former Finance Secretary Jose Pardo.

That time, the government successfully raised ¥35 billion through the issuance of Samurai bonds. The administration at that time used the proceeds of the bond sale to finance crucial infrastructure projects.

Samurai bonds are yen-denominated bonds issued in the Japanese financial market by a foreign government or company.

Beltran said the issuance of Samurai bonds guaranteed by the state-backed Japan Bank for International Cooperation is an option for the government.

Japan earlier announced that is setting aside Japanese ¥6 trillion or $61.54 billion to help countries hit by global economic crisis.

It announced during the recent Asian Development Bank (ADB) annual meeting in Indonesia that it would encourage developing countries’ efforts to regain access to international markets despite the worldwide turmoil.

Japan had agreed to provide guarantees totaling up to ¥500 billion for Samurai bonds issued in the Japanese bond market by Asian developing countries.

As part of this pledge, Japan had already agreed to help Indonesia issue up to $1.5 billion of Samurai bonds with JBIC providing a guarantee.

Finance Secretary Margarito Teves had said that the government would indeed borrow more following an increase in its budget deficit program for 2009.

The Development Budget Coordination Committee (DBCC) raised the budget deficit ceiling to a record level of P250 billion or 3.2 percent of gross domestic product instead of the revised P199.2 billion or 2.5 percent of GDP.

The DBCC raised the deficit ceiling following a downward revision in the GDP growth target for 2009 to a range of between 0.8 percent and 1.8 percent instead of the revised 3.1 percent to 4.1 percent.

GDP expanded by only 0.4 percent in the first quarter of the year due to the prolonged impact of the global financial meltdown.