MANILA, Philippines - The government may borrow an additional P5 billion to P7 billion from the local debt market this year to help plug the projected increase in budget deficit, the Department of Finance (DOF) reported yesterday.
Finance Secretary Margarito B. Teves said ealier that this year’s budgetary shortfall could widen to a record P300 billion if the government raises spending to achieve a higher growth goal.
Originally, the government had set a budget gap of P293 billion for the year, narrower than the P298 billion recorded last year but had to revise this upward on expectations of faster economic growth this year.
Finance Secretary Margarito Teves said the government may borrow an additional P7 billion more from the local debt market to fund the deficit. National Treasurer Roberto Tan, meanwhile, said the government may borrow roughly P5 billion more.
“The National Treasurer (Roberto Tan), the Undersecretary of the International Finance group (Rosalia de Leon) and the Deputy Governor of the Bangko Sentral ng Pilipinas (BSP) will recommend and subsequently implement the appropriate combination and approximate timing,” Teves said.
Tan, for his part, said the additional domestic borrowings – which would be completed through the issuance of Treasury bills and bonds – may happen in the third and fourth quarter of the year.
“We can easily accommodate it in the third quarter or fourth quarter,” Tan said.
On Tuesday, the interagency Development Budget Coordination Committee (DBCC), the group that sets the country’s macroeconomic assumptions, has revised upward the economic growth target this year to five to six percent from the previous range of 2.6 to 3.6 percent.
This would translate to a higher budget deficit ceiling of roughly P300 billion but as a percentage of gross domestic product (GDP), the budget gap would remain at 3.6 percent.
The upward revision in the macroeconomic assumptions is due to the stronger-than-expected first quarter growth of 7.3 percent.
The government had planned to borrow P708.513 billion this year, or P488.04 billion from the domestic market and P220.473 billion from foreign lenders.
In April, the government posted a budget surplus of P2.6 billion or smaller than the P7.9-billion surplus posted in the same month last year but a marked improvement compared to the monthly deficits incurred since the start of the year.
The January to April budget position, meanwhile, stood at a deficit of P131.6 billion, narrower than the deficit ceiling for the period of P145.2 billion but more than the deficit in the same period last year of P111.8 billion.