Gov’t to borrow P120B in fourth quarter

The national government has set a lower domestic borrowing program for the fourth quarter from a year ago due to its improving fiscal situation and the low-interest rate environment.

In a public notice released Friday, the Bureau of the Treasury said the government would borrow P120 billion from the local capital market in the fourth quarter.

Of the amount, P40 billion will be raised from the sale of short-term treasury bills and P80 billion from the issuance of longer-dated treasury bonds.

The latest domestic borrowing program is nearly 60-percent lower than the P294.92 billion worth of treasury bills and bonds sold by the government in the fourth quarter last year.

Should the latest quarterly domestic borrowing program be observed, the government’s total local borrowings for this year will be no more than P508.23 billion, or a 36-percent drop from the P798.15 billion raised in 2012 through the sale of government securities in the local market.

Data from the Treasury showed that the government raised P247.07 billion in the first semester and was set to raise another P150 billion in the third quarter from the sale of securities in the local market.

Proceeds of these borrowings are used largely to pay maturing obligations and partly to plug the government’s budget deficit.

An improving fiscal situation due to better revenue collection has been credited for reducing the government’s budget deficit for this year. The budget-deficit ceiling for 2013 is set at P238 billion, but finance officials said there was a likelihood the actual figure could be lower. Last year, the deficit stood at P242 billion.

Meantime, low interest rates have helped trim the cost of borrowings this year. As such, the government needs to allocate less to pay for the same amount of borrowings.

Local interest rates fell to record lows this year, with treasury bills rates declining to less than 1 percent, on the back of strong appetite for government securities, the excess liquidity in the system and the government’s improved credit standing.