The Philippines is likely to run to the debt markets to plug the swelling revenue and expenses gap of the government in the light of the global economic slump.
Ranking finance officials said Monday that the government is jacking up its foreign and domestic borrowings this year since the national budget deficit is widening.
An official of the Finance Department on Monday said they expect a higher budget deficit of P160 billion or 2 percent of gross domestic product.
The Development Budget Coordination Committee, too, is likely to revise the deficit target, which was previously at P102 billion or 1.2 percent of GDP.
The original deficit target for 2009 was only P40 billion, or 0.5 percent of GDP.
The Philippines already raised its borrowings this year by 16.5 percent to P509.9 billion from P437.1 billion after the budget deficit ceiling was revised to P102 billion.
National Treasurer Roberto Tan confirmed that the government would indeed have to adjust its borrowing program in light of the projected higher deficit.
About 76 percent of the total amount would be sourced from domestic investors through the issuance of government-backed treasury bills and treasury bonds.
The balance--24 percent--would be sourced from foreign commercial sources as well as multilateral lending agencies.
The Philippines is supposed to source $2.6 billion from foreign creditors this year. Of the total amount, about $1.5 billion would come from foreign commercial sources while $1.1 billion would come via cheaper ODA loans from multilateral lending agencies.
The national treasurer, however, is not shutting the doors on the possibility that the Philippines may again tap the international bond market this year after successfully raising $1.5 billion when it sold 10-year US-dollar denominated benchmark bonds early January.
“We still need it (foreign borrowing). I am not closing the door on anything. Once it is announced we will formulate our borrowing plan,” he said.
Loans from World Bank, etc
Tan said the government has decided to increase its official development assistance loans to $1.75 billion from the programmed $1.1 billion for this year.
He said the government is now negotiating with Japan International Cooperation Agency for a program loan ranging from $250 million to $300 million to co-finance the social protection program of the World Bank.
He added that the Philippines also hopes to finally disburse $350 million worth of ODA loans coming mainly from World Bank and Asian Development Bank this year.
“We expect more program loans this year. We are getting additional loans against the program,” Tan said.
Some legislators recently ganged up on World Bank after it revealed bid rigging findings involving Filipino firms vying for a $150 million worth road project.