Govt Cuts Q4 Domestic Borrowing

By CHINO S. LEYCO September 29, 2012, 5:10pm

mb.com.ph | The Manila Bulletin Newspaper Online The Aquino administration decided to borrow less from the domestic market in the final three-months of the year amid plan of selling retail bonds targeted at small investors, data from the Bureau of Treasury showed late Thursday. According to the program released by the treasury bureau, the government plans to sell P90 billion worth of Treasury-bills and -bonds in October to December period, lower compared with the P108 billion program in the third-quarter. Starting October, the treasury bureau will sell only P1 billion worth of 91-day Treasury bills (T-bills) at an auction every other week in the fourth-quarter, just the same value compared with the government offered to investors in the thirdquarter. The government also decided to keep the amount of 182-day T-bills to be auctioned in the third quarter to P2.5 billion and that of the 364-day T-bills at P4 billion. In October to December, the treasury intends to sell P45 billion worth of 91-, 182, and 364-day T-bills and another P45 billion worth of five, seven and 10 treasury bonds to investors. For next year, Finance Secretary Cesar V. Purisima earlier said that the Aquino administration will continue its reliance on domestic funding sources as the government wants to minimize foreign exchange risk. Purisima said that the government prefers local funding for its financing needs, citing they will tap the local market for about 75 percent of the total borrowing requirement for next year. He said the government needs to borrow P757.72 billion next year, higher by 6 percent compared with P716.51 billion this year. Of the total amount, the government plans to borrow P567.96 billion from local banks, higher by 6.1 percent compared with P535.07 billion. Meanwhile, the state will tap foreign lenders for its P189.76 billion financing need in 2013, up by 4.5 percent from P181.43 billion this year. The governments proposed foreign-to-domestic borrowing mix maintained at 75:25 next year. The finance department has been limiting the governments foreign borrowings since the start of the Aquino administration by increasing the domestic component of its entire financing program amidst a very liquid local market. The government also aims to reduce countrys foreign currency-related risks. But as a strategy, Purisima said the Philippine government will maintain its presence in the overseas debt markets. He earlier said the governments goal right now is to increase the share of domestic borrowing to 80 percent from 75 percent. National Treasurer Roberto B. Tan also had said that the government was inclined to tap the domestic market. The government plans to borrow some P727.4 billion from domestic and offshore sources this year to finance the budget shortfall seen hitting 2.6 percent of the total economic output.