The Philippine government will not borrow more in local markets than originally planned despite a wider than expected budget gap this year and after raising $1.5 billion from a global bond issue this week, National Treasurer Roberto Tan said.

The government may keep its 2010 local debt plan at around P475 billion, inclusive of interest payments, even if it now estimates its budget deficit may be 25 percent higher than expected, Tan said.

The shortfall could reach P293 billion this year, compared with an original target of P233.4 billion, the government said last month.

''This is the indicative figure,'' Tan told Reuters regarding the local debt plan, adding the plan requires final approval from the Development Budget Coordination Committee, the inter-agency body tasked to set the government's macro-economic policies.

Market players said a decision to maintain the domestic debt plan bodes well for local interest rates.

''That will be positive for the market because there will be no changes when its comes to supply, which means that the chances of an uptick in interest rates will be minimal,'' said a Manila-based trader.

Finance Undersecretary Rosalia de Leon told Reuters on Thursday the government may increase its 2010 foreign debt issues to $2.5 billion from an original plan of $2 billion to help bridge a higher fiscal gap and refinance debt.

She also said the government's 2010 borrowing mix was likely to be revised to 66-34 in favour of local debt under the current budget gap estimate from a previous mix of 72-28.

This runs counter to previous statements by Finance Secretary Margarito Teves that additional debt issues to fund a larger budget gap this year would mainly be in domestic borrowings.

On Wednesday, the Philippines became the first sovereign issuer in Asia this year after it sold $1.5 billion worth of existing 2034 bonds and 2020 bonds .

Finance officials have said Manila was preparing for a Samurai bond sale of at least $500 million this month after it signs the terms of issue with the Japan Bank for International Cooperation, which will guarantee the bonds. No date has been set for the signing.

The Samurai bond sale would complete Manila's foreign borrowing needs this year. Last October, it raised $1 billion from a global bond offer, part of which was meant to finance a portion of this year's budget deficit.

Manila's overseas borrowings this year would likely reach $4.953 billion, including loans from official development agencies, up from an original plan of $3.8 billion, de Leon has said.

The country, which relies heavily on foreign and domestic borrowings to fund its fiscal shortfall, is also aiming to raise 30 billion pesos in extra revenues from the sale of government assets in the current quarter.

The Southeast Asian country aims to balance its budget by 2013. (Reuters)