RP says may issue up to $750 mln in foreign debt

ABS-CBN News

Posted at Jun 04 2008 03:43 PM | Updated as of Jun 04 2008 11:43 PM

Reuters

The Philippines may tap up to $750 million from international debt markets later this year to help fund aid to the poor to cushion the impact of soaring food and energy prices, the financial secretary said on Wednesday.

The comment marks a turnaround from the first quarter, when the country said it had fulfilled its international borrowing requirement with a $500 million bond sale in January.

Finance Secretary Margarito Teves said the extra borrowing was to help bridge a budget shortfall after the government announced additional spending plans of up to P93.6 billion ($2.1 billion) to fund programs to help the poor cope with rising living costs.

The actual borrowing requirement had not been set, he said.

"The amount can change depending on economic, fiscal and market conditions and opportunities," he told Reuters.

To help finance the additional spending on top of an approved annual budget of 1.236 trillion pesos this year, the government said it hopes to strengthen revenue collection, sell more state assets and borrow more.

Apart from overseas debt issues, the government wants to increase its borrowings from official development assistance (ODA) agencies such as the World Bank and Asian Development Bank, and possibly issue more domestic debt through the Treasury's over-the-counter window.

"We will try to maximize availment of ODA depending on timing, fiscal and market conditions, among others," Teves said.

The government had hoped to balance its budget this year after more than a decade of chronic budget deficits.

It now projects a 2008 budget deficit of as much as P75 billion , or 1 percent of gross domestic product, wider than its shortfall of P12.4 billion, or 0.2 percent of GDP, in 2007.

The government hopes higher public spending could help limit the impact of a slowing global economy on the Philippines.

The government expects the economy to grow between 5.7 percent and 6.5 percent this year.

That is lower than its original target of between 6.3 percent and 7.0 percent and below last year's actual 7.2 percent expansion, a 31-year high.

The Philippines has pushed back its balanced budget goal to 2010.