"The best approach is to grow out of debts," Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. said.
Tetangco said that while it is important for the government to maintain its access to international financial markets, there is also a need to maintain a healthy fiscal position through effective management of government finances.
"The general idea is for the National Government to reduce its deficit over time. If we reduce our deficit, there would be no need to borrow and at some point, lower the debt of the government," he said.
Finance Secretary Margarito Teves has reported that a team from multilateral creditors will visit Manila on November to discuss the proposed new refinancing window for the Philippines which will carry lower interest rates.
Teves said the savings that would be generated from this possible arrangement with the International Monetary Fund (IMF) and the World Bank could be used for infrastructure and social services.
The finance chief said they would try to "stretch" or reduce the interest rate if possible under the proposed refinancing facility.
But Tetangco has a different view. "IMF follows the principle of revolving resources. I do not know how they would this arrangement be done," he said.
He said IMF’s main purpose is to lend through the balance of payment (BOP) financing which usually are medium-term loans or with five-year maturity.
The WB, on the other hand, has the so-called International Development Association which could be tapped for this purpose.