MANILA, Philippines - The government is seen to borrow P715 billion from local and foreign sources next year, 2.7 percent lower than the estimated 2013 borrowings of P735 billion, according to the head of the Department of Budget and Management.
In a briefing yesterday, DBM Secretary Florencio B. Abad said domestic loans will continue to account for the lion’s share of the Aquino Administration’s total borrowings next year with P620 billion, which is less than the P670 billion programed for this year.
About P95.03 billion, on the other and, will be sourced overseas either through bond issuances or in the form of official development assistance from multilateral financial institutions.
The government borrows from the local market via the sale of Treasury bills (T-bills) and bonds.
For this year, the government plans to borrow P630.6 billion locally and P104 billion from the international market.
The Aquino administration has been borrowing more from local sources to take advantage of strong liquidity and record low interest rates in the domestic financial market.
“The economy is growing so the ability to generate revenues for consumption also grows. If you borrow less when the country can spend more, revenues are projected to be greater. They make up for less borrowings,†Abad said.
The increase in domestic borrowings is in line with the government’s goal to reduce the foreign currency component of its total debt, lengthen maturities, and pare down borrowing costs.
Latest data from the Bureau of Treasury showed that the country’s debt reached P5.31 trillion as of end-April this year, up 4.6 percent from P5.075 trillion in the same period in 2012.
Of the government’s total outstanding debt, 65 percent or P3.44 trillion came from domestic creditors while the balance of 35 percent or P1.87 trillion was obtained from external creditors.
For this year, the government’s outstanding debt is forecast to rise to P5.78 trillion, equivalent to 48 percent of the country’s gross domestic product.
President Aquino’s administration is bent on limiting the country’s deficit to P238 billion this year or two percent of GDP as it aims to achieve sustained inclusive growth.
The Philippines, which was termed “the sick man of Asia for lagging behind its peers, has slowly transformed into a revitalized and more dynamic country. It posted strong growth in the first quarter with GDP rising to 7.8 percent, the fastest clip since the first quarter of 2012 and outperforming China’s 7.7-percent annual pace.
In the five months ending May this year, the government’s borrowing program continued to be on the downward trend, falling 46 percent to P203.08 billion.