RP trims second quarter domestic borrowing

MANILA, Philippines - The national government trimmed its domestic borrowings in the second quarter of the year by 3.2 percent as it expects to book the proceeds of its foreign commercial borrowings as well as concessional official development assistance (ODA) loans from multilateral lending agencies led by the World Bank and Japan International Cooperation Agency.

National Treasurer Roberto Tan announced yesterday that the government would issue debt papers worth P107 billion in the domestic market between April and June or P3.5 billion lower than the programmed borrowing of P110.5 billion from January to March this year.

However, the programmed domestic borrowing in the second quarter was P2.5 billion higher than the P104.5 billion programmed borrowing in the same quarter last year.

Tan said the Bureau of Treasury would issue P56 billion worth of 91, 182, and 364-day Treasury bills (T-bills) in the second quarter this year or P5 billion more than the programmed T-bill issuance of P51 billion from January to March.

The treasury has decided to cut the issue size of the three-month debt papers to P1.5 billion in the second quarter from P2 billion in the first quarter but retained the size of the 182-day government securities at P3 billion and the size of 364-day T-bills at P3.5 billion.

On the other hand,Tan said the government would also issue P51 billion worth of five, seven, 10, and 20-year Treasury bonds (T-bonds) in the second quarter of the year or P8.5 billion lower than the programmed T-bond issuance of P59.5 billion in the first quarter.

Earlier, Tan hinted that the government would issue less debt papers in the domestic market in the second quarter of the year as proceeds from its other fund raising activities abroad have trickled in.

The Philippines successfully raised $1.5 billion from the sale of US-dollar denominated bonds last January and another $1.1 billion from the issuance of Samurai bonds in the Japanese market last February. It hopes to raise another $500 million from the sale of retail bonds to overseas Filipino workers (OFWs) by end-April.

Finance officials also expect the disbursement of additional ODA loans from lending agencies including WB, JICA, Asian Development Bank, and others.

The national government is in dire need for funds to plug its yawning budget deficit. It hopes to trim the budget shortfall to P293 billion or 3.5 percent of gross domestic product (GDP) from a new all-time high of P298.5 billion or 3.9 percent of GDP last year eclipsing the previous record level of P210.7 billion or 5.3 percent of GDP booked in 2002.

The government relies heavily on foreign and domestic borrowings to financial its budget shortfall as tax collections continue to be weak in light of the weak domestic economy due to the global economic meltdown.

Adverse external developments forced the Arroyo government to abandon its commitment to balance the budget last year and even its original commitment to put its fiscal house in order by 2010 under the Medium Term Philippine Development Plan (MTPDP).

The country’s budget deficit swelled to P68.1 billion or 0.9 percent of GDP last year from P12.4 billion or 0.2 percent of GDP in 2007 as the faltering domestic output pulled down government revenues.