Gov’t proposes lower borrowing program

MANILA, Philippines - The government is proposing a slightly lower borrowing program for next year, with the bulk still to be financed locally in a bid to take advantage of huge domestic liquidity. 

According to National Treasurer Rosalia de Leon, a total of P714.6 billion will be borrowed by the Aquino administration next year, 2.78 percent lower than this year’s P735 billion.

“The borrowing mix will be 87 percent to 13 percent, in favor of domestic borrowings,” she said.

Broken down, funds to be raised in the domestic market will amount to P620 billion, a decline of 7.44 percent from the programmed P669.8 billion this year.

“We still expect strong appetite for government securities even in terms of tenor. Definitely, we see strong demand in the long-end of the curve,” De Leon said.

Inflation is expected to remain benign, she explained, and thus that would drive investors to seek for higher yields which will be found in longer-termed papers.

On the foreign market, De Leon said a total of P94.6 billion, equivalent to $2.2 billion, may be raised through bond flotations and official development assistance (ODA) from multilaterals.

Of the total foreign financing, $1 billion may be sourced through offshore bond issuances, while the remaining amount of $1.2 billion may come from the World Bank and the Asian Development Bank, among others.

The planned external borrowings for 2014 will mark the return of the Philippines in the foreign market after it decided to source all its financing needs locally this year.

 â€œIt will also depend on market appetite and market conditions and also on the cash flow of the government…We want to keep our options open,” De Leon pointed out.

In a speech at the 2013 Fixed Income Roadshow yesterday, De Leon said the Aquino administration is boosting revenue collections next year to cap the budget deficit at two percent of economic output.

Among others, tax evasion and smuggling cases will continue to be filed, she said, while reforms such as rationalization of fiscal incentives will be pursued.