Gov’t eyes local, not foreign, lenders

The government may tap the domestic capital market to raise a portion of the $750 million it originally planned to borrow offshore, as officials cited the high liquidity and low interest rates prevailing in the Philippines.

According to the original 2012 borrowing program set by the Department of Finance, the government was supposed to borrow $2.25 billion from the foreign capital market this year to help fund its expenditure requirements, which include higher spending for social services and infrastructure.

The amount represents 25 percent of the government’s supposed borrowing program for the year. The bulk of 75 percent was meant to be raised domestically.

Nonetheless, benign interest rates in the country and the domestic capital market’s huge resources currently have prompted finance officials to consider increasing the share of domestic borrowings in relation to foreign loans.

A Department of Finance official said that the agency is currently studying the possibility of tweaking the original borrowing program. As it mulls over the 2012 borrowing plan, she said, the DoF may redraw the timetable for raising the $750 million in the second half of the year.

“The $750 million [borrowing] may be pursued in the second half. We [DoF] are still studying the options,” Finance Undersecretary Rosalia de Leon said.

The banking sector’s total resources amounted to P7.61 trillion by the end of 2011—up 5.3 percent from the P7.23 trillion seen the previous year.—Michelle V. Remo