MANILA, Philippines - Fresh from a highly successful international bond sale, the Philippine government is now in a more comfortable position to jumpstart top priority projects which include the upgrade of the country’s transportation system and the construction of more schools.
Last Tuesday, the country sold $2 billion worth of 25-year bonds in the global market with a yield of 3.95 percent annually, the lowest ever average borrowing cost for IOUs issued by the Philippine government.
Of the total proceeds, $500 million would be used to fund this year’s budget while the bigger portion of $1.5 billion would cover the swap and retirement of old bonds.
Budget Secretary Florencio “Butch” Abad said the $500 million in new capital raised from the global bond offering gives the national government enough fiscal space to address its budgetary requirements.
“We will be able to devote funds that would have gone to debt principal and interest payments, to urgent priority projects and programs instead,” Abad said.
“Thanks to the funds generated by this offering, we will find ourselves in a better position to upgrade our commuter rail system, build more schools and hire more teachers, and strengthen other government programs designed to fight poverty and catalyze economic growth,” he added.
Abad said education reform remains one of the key priorities of the Aquino administration given the shortage of classrooms nationwide.
The two chambers of Congress approved last month the proposed P22.5 billion supplemental budget, which the Aquino government intends to use to fund the comprehensive rehabilitation and reconstruction program for areas devastated by Super Typhoon Yolanda as well as the rehabilitation of lines 1 and 2 of the Light Rail Transit System.
The supplemental budget would also address obligations incurred by the government on completed or commenced projects under the Priority Development Assistance Fund, as well as approved projects supported by the Disbursement Acceleration Program that need implementation.
“Our goal, as always, is to manage public spending so that every peso spent by government will serve the Filipino people’s most urgent needs,” Abad said.