DOF mulls options for $750-M loan plan

MANILA, Philippines - The Department of Finance is studying its options for its remaining $750-million commercial foreign borrowing requirement for the year, a ranking official yesterday said.

Finance undersecretary Rosalia de Leon said the government is looking into different schemes and has no approvals yet for any of the options being studied.

“We don’t have approvals yet. There are many issues and mechanics to work on,” she said.

The Bangko Sentral ng Pilipinas (BSP) wants the government to take advantage of the cash-rich domestic market by just borrowing locally.

This way, the national government does not add to foreign exchange supply, which would contribute to the appreciation of the peso against the dollar.

During a budget hearing at the Senate early this month, BSP Governor Amando Tetangco Jr. said the government has room to increase domestic borrowings this year.

However, fiscal authorities prefer to stick to the program to keep the Philippines on the radar screen of foreign lenders.

The national government has a remaining external borrowing program of $750 million for 2012 but it remains undecided on whether or not it would veer away from the borrowing program this year and instead raise the equivalent amount from the cash-rich domestic market.

Monetary authorities want the national government to just tap the local debt market for its remaining borrowing needs to siphon off excess liquidity in the system.

Finance secretary Cesar Purisima has said the government is ready to borrow from foreign creditors again this year when there is an opportunity.

In January, the Philippines successfully raised $1.5 billion from an issue of 2037 global bonds.

The Philippines, Asia’s largest sovereign issuer, has not issued global peso bonds yet for the year.

The government had programmed to borrow $4.02 billion from external sources this year, lower than the programmed $4.5 billion for last year, according to the 2012 borrowing program.