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Gov’t eyes more borrowings in 2015; 85% from local sources

The Aquino administration is looking at tapping more domestic borrowing next year to finance the government’s budget deficit, the head of the country’s economic managers said yesterday.

ABAD

ABAD

Budget and Management Secretary Florencio B. Abad said the government is leaning toward the domestic market when it comes to its borrowing plan as it keeps a budget deficit ceiling of about 2 percent of the country’s gross domestic product (GDP).

“The local [borrowing] will be much more [next year]. Increasingly, we will depending on the local borrowings compared with foreign,” Abad told reporters on the sidelines of a signing ceremony between two government departments and a state pension fund.

The budget chief, however, declined to provide exact details on the borrowing program for 2015.

This year, the national government plans on a borrowing mix of 85:15 in favor of domestic credit.

The government bridges its budget deficit through onshore and offshore borrowings. The latter includes cheap loans from bilateral and multilateral lending agencies.

For 2015, the Aquino administration is looking at a P2.606 trillion budget, which is higher by about 18 percent compared with P2.26 trillion budget for this year.

In 2013, the national government’s debt as a proportion of the country’s whole economy slid on the back of the Aquino administration’s liability management program.

Data from the treasury bureau showed that government outstanding debt as a percentage of the economy, as measured by GDP, declined by 2.3 basis points to 49.2 percent from 51.5 percent in the previous year.

The debt-to-GDP ratio, one of the key indicators closely watched by major international credit rating agencies, is a measure of the government’s capacity to settle its obligations.

According to the treasury bureau, both external and domestic debt ratios fell to 16.9 percent and 32.3 percent of GDP from previous levels of 18.6 percent and 32.8 percent, respectively.

“These developments highlight greater resiliency and sustainability in the trajectory of the national government debt,” the treasury bureau said.

The drop in debt-to-GDP ratio is in line with Aquino administration’s goal of reducing it to below 45 percent by 2016, which will be driven by the government’s effort to boost further its tax collections through efficiency as well as proactive debt liability management agenda.

Since the Aquino administration took office in 2010, the government debt-to-GDP ratio has been in a declining trajectory from a high of 54.8 percent in 2009.

In 2013, the national government debt increased by 4.5 percent year-on-year to P5.681 trillion from P5.437 trillion due to higher domestic obligations.

Of the total debt, P1.948 trillion or 34 percent was from foreign creditors, while the remainder P3.733 trillion or 66 percent was sourced from domestic creditors.

As of December last year, the government domestic debt increased by 7.6 percent year-on-year, while external debt fell by 1.1 percent, which the treasury said is in line with the government’s financing program of focusing on local borrowing.