Gov’t plans to borrow $3.2B abroad in 2013

The government plans to borrow as much as $3.2 billion from foreign sources next year, intending to use the proceeds to help fund development projects and programs and settle maturing dollar-denominated obligations.

National Treasurer Rosalia de Leon said the amount was slightly higher than the estimated $3 billion that the government would have borrowed from foreign creditors and bond investors for the whole of 2012.

De Leon said $1.5 billion to $2 billion of the borrowing program next year was intended to be secured through the sale of government bonds in the international market.

Between $1 billion and $1.2 billion is intended to be borrowed from developmental lenders such as the Japan Bank for International Cooperation, the Asian Development Bank and the World Bank. Loans from these institutions are used to fund development projects and programs such as infrastructure and subsidies to the poor.

The government needs to continue borrowing as expected revenues from tax collection and fees imposed by line agencies were seen to still fall short of the total expenditure requirements. Nonetheless, officials said the government’s budget deficit was on a declining trend.

De Leon said the amount of expected foreign borrowings for 2013 would constitute 20 percent of the total amount that the government intended to borrow in 2013. The bigger share of 80 percent will be domestic borrowings, which are usually done through the sale of treasury bills and bonds in the local market.

The 80:20 borrowing mix in favor of domestic sources is aimed at helping avoid additional pressure on the peso to appreciate against the dollar.

The entry of a substantial amount of dollars into the country in the form of remittances and foreign portfolio investments has largely caused the appreciation of the peso by about 6 percent since the start of the year to the 41-to-a-dollar territory from 43 at the start of the year.