No change in government’s borrowing program for this year — Cruz

National Treasurer Omar Cruz said yesterday there will no change in the Arroyo administration’s foreign borrowing program for this year despite the improvements in the government’s fiscal position.

Cruz said the government’s borrowing program will remain at $4 billion even with the fiscal surplus in April.

According to Cruz, the foreign borrowing program was based primarily on the government’s maturing foreign currency-denominated obligations this year.

"That doesn’t change with the changes in our fiscal position," Cruz said. "It’s more or less predictable at the start of the year how much we will need for servicing our debts."

According to Cruz, the Arroyo administration intends to raise $3.1 billion from commercial foreign borrowing and about $900 million from bilateral and multilateral sources of official development assistance (ODA).

"Domestic borrowing will still be 60 percent of our total borrowing mix," Cruz said. "We don’t want to send mixed signals. It’s still going to be 60-40."

As a matter of policy, Cruz said finance officials would not change the borrowing program since it would run the risk of losing its investors who make their own investment decisions based on the borrowing intentions disclosed in the market.

"If we say we will borrow less and then it turns out otherwise, we might get told that our offers are no longer in their radar because we said we will no longer be in the market," Cruz explained.

Thus far, the Arroyo administration has raised a total of $2.25 billion from two separate global bond issues in January and April.

But Cruz said the government is keeping its options open for the rest of the year, depending only on market conditions and the size of market appetite for emerging markets.

"It’s not just us, it’s the emerging markets in general that are attracting investor interests," Cruz said. "We don’t know how long it will last, we have to see what comes up."

After the success of its two previous global bond offers, the Arroyo administration might consider issuing Eurobonds possibly in the third quarter of the year.

Its two previous issues had already brought down the National Government’s remaining commercial borrowing requirement to $850 million.

Cruz said the market response to the latest float had expanded its options for its subsequent borrowing in the coming months.

"We have all the time in the world and much more options this time," Cruz said. "We have until the third quarter before we have to seriously consider going back to the market."

Last April, the Bangko Sentral ng Pilipinas (BSP) has already given the National Government a stand-by authority for an undetermined amount of Eurobonds sometime this year.

The BSP approved the proposed issue last month, paving the way for finance officials to commence negotiations with underwriters to prepare and package the issue.

According to Cruz, issuing Eurobonds was an option. "That is entirely possible because we only need to raise $850 million to complete our borrowing program this year," he said. "Given that size, we can do Euro if the market is conducive."

"We’re done the bulk, we can relax a little, take time looking at the market," Cruz said. "We don’t have to do anything until the third quarter anyway."