Gov’t to borrow $1-B before polls

The Arroyo administration is looking to raise another $1 billion from the international credit market as part of an effort to front-load its 2004 external borrowings to avoid the crunch that is expected to build up towards the May elections next year.

The government just concluded a successful $1.5-billion global bond offer last week, but officials said they were still looking for opportunities to borrow ahead of the elections, probably before the end of the year.

National Treasurer Sergio Edeza told reporters that the government is planning to borrow another $1 billion although it has not been decided whether it would be in the form of a straight loan or a global bond offering.

"Definitely we don’t want to go to the market right before the elections," Edeza said. "We have to see if we can get good terms and if there is still an appetite in the market for us."

The success of the Philippine government’s recent bond float, according to Edeza, was the result of the pent-up demand for Philippine instrumentalities. "We had announced early on that we planned to issue bonds but we didn’t do it right away so there was a build-up in demand," he said. "That’s why there was such a strong response to our last offer."

However, Edeza said there is no pressure to borrow especially after the success of the government’s bond offer. "We just want to know if it is possible to front-load our borrowing ahead of the elections," he said.

Finance Secretary Jose Isidro Camacho said there is a possibility of the government going back to the international credit market this year even after its successful bond float.

"We’re always in opportunistic mode," he said. "We try not to miss out on openings in the market but right now, we have the flexibility not to borrow immediately."

The government’s borrowing requirement for 2004 is estimated at $1.8 billion which would help finance about $7 billion worth of various obligations of the government and government-owned corporations that were scheduled to mature within the next 16 months.

A senior Monetary Board official said the amount of maturing obligations for the remainder of the year is "slightly over $5 billion", including the maturing obligations of the National Power Corp.

In 2004, the National Government’s maturing obligations amount to $500 million but the official said the obligations of government owned and controlled corporations like the Napocor would add another $1.5 billion.

So far, the government has raised $1.5 billion from its bond float. About $250 million of the proceeds will take care of the government’s funding requirement for the rest of the year which the balance will be used to pre-fund its 2004 requirements.

All in all, the government has borrowed roughly $1.25 billion for 2004.