BSP Governor Amando M. Tetangco Jr. said the central bank has substantial dollar hoard and could afford to prepay the term loan facility they borrowed in October 2003 and which will mature this year.

"The decision took into consideration the higher level of gross international reserves and the continuing foreign exchange inflows, which have improved the external liquidity position of the BSP," Tetangco explained.

As of end-February the country’s GIR stood at $ 20.57 billion, already surpassing this year’s fullyear target of $ 18.65 billion.

The central bank said GIR got a boost from deposits made by the National Government from its last bond sale and also from the BSP foreign exchange operations and income from investments abroad.

Both the BSP and the Bureau of Treasury said earlier that the government could afford to reduce its foreign borrowings because of dollar surpluses.

Tetangco said the government would continue to have leeway in the borrowing requirement and adjust the borrowing mix. This means borrowing more in local currency, which is preferred by the Department of Finance.