Phl to borrow $1B this year

MANILA, Philippines - The Aquino administration is planning to borrow $750 million to $1 billion from the foreign commercial debt market this year, with fund-raising activities to start only after January, breaking away from tradition, National Treasurer Rosalia De Leon said yesterday.

 “Definitely, there will be no commercial borrowing in January,” De Leon said.

For the past several years, the Philippines has been issuing sovereign bonds in January, ahead of its peers in the region.

The government is looking at raising the $750 million to $1 billion through the sale of global peso notes, which would help spare the government from foreign currency debt, De Leon said.

The $750 million to $1 billion is lower than the $1.5 billion to $2 billion planned foreign commercial borrowing for 2013, which the government announced in November.

For this year, the government has a program to source 75 percent of its funding needs from domestic sources and 25 percent from foreign lenders.

However, De Leon said the borrowing mix could change given the preference to tap the cash-rich domestic market.

The Bangko Sentral ng Pilipinas (BSP) has been encouraging the government to change its borrowing tack and borrow instead entirely from the domestic market.

This is to prevent additional dollar inflows into the country that could push the peso to appreciate further against the dollar.

De Leon said that the government’s foreign borrowings would be in the context of debt liability management instead of simply for fund-raising.

As such, it’s possible that the share of domestic funding sources would even hit 86 percent as the government strives to reduce its foreign debt.

As of end-September, the share of domestic funding has already increased to 84 percent while the share of foreign borrowings has narrowed to 16 percent.

The move is part of the Aquino administration’s efforts to focus more on domestic sources to help cushion the economy from foreign exchange fluctuation and to help ease pressure on the peso.

In 2011, the government borrowed 65 percent from the local market and 35 percent from foreign sources, an improvement from 2010’s borrowing mix of 66 percent and 34 percent, in favor of domestic sources.

For 2013, it has programmed to borrow a total of P757.8 billion, of which P189.8 billion or 25 percent will come from foreign creditors and the balance of P568 billion or 75 percent will come from domestic sources.

The government has programmed a budget deficit of P279 billion in 2012 and P241 billion in 2013.