Philippines - Gov't To Limit Foreign Borrowing

MANILA, Philippines — The Department of Finance (DoF) plans to limit the government's foreign borrowings this year by increasing the domestic component of its entire financing program due to a "very liquid" local market.

Finance Secretary Cesar V. Purisima said in an interview with foreign correspondents that the government's goal right now is to increase the share of domestic borrowing to 80 percent from 75 percent.

The plan was seconded by National Treasurer Roberto B. Tan, saying the government is inclined to tap the domestic market for the remainder of its 2012 borrowing requirements.

“The bias is to borrow domestically because the market is very liquid and we'd like to take advantage of it,” Tan said in a separate interview.

He added that the government may later on decide to issue its second retail bond for the year after raising a record P179.8 billion from its latest retail bond sale last month.

“The idea is to twice a year but there's no definite decision yet,” Tan said.

Finance Undersecretary Rosalia B. de Leon earlier said the government may shift its remaining $750-billion commercial borrowings this year into the domestic market in line with its plan of curbing the continued inflows and to tap the “very liquid” domestic market.

De Leon added the government’s preference is to borrow more from local investors, but she, however, pointed that the plan was very preliminary and the decision will depend on market opportunity.

Purisima had said that the government may decide to revise its present 75:25 borrowing mix and further favor more domestic borrowings amid robust liquidity in the local market.

“The local market is very liquid and there’s an opportunity for us to continue borrowing. In the past, we started with the plan, but normally we ended up borrowing more locally,” Purisima said.

The finance department has been favoring local borrowing than overseas since the start of 2011 as the Aquino administration aims to reduce country’s foreign currency-related risks.

But as a strategy, he added the Philippine government will maintain its presence in the overseas debt markets.

The government plans to borrow some P727.4 billion from domestic and offshore sources this year to finance the budget shortfall seen hitting 2.6 percent of the total economic output.

CHINO S. LEYCO

mb.com.ph

Business & Investment Opportunities 

YourVietnamExpert is a division of Saigon Business Corporation Pte Ltd, Incorporated in Singapore since 1994. As Your Business Companion, we propose a range of services in Strategy, Investment and Management, focusing Healthcare and Life Science with expertise in ASEAN. We also propose Higher Education, as a bridge between educational structures and industries, by supporting international programmes. Many thanks for visiting www.yourvietnamexpert.com and/or contacting us at contact@yourvietnamexpert.com