DBCC revises govt borrowing program with eye on budget deficit target of 3% of GDP

National Treasurer Rosalia de Leon. BUSINESSWORLD FILE

MANILA – Philippine economic managers have revised upwards the government’s 2017 borrowing program, and National Treasurer Rosalia de Leon said this was in line with the 3 percent ceiling earlier set by the administration.

De Leon confirmed reports that the interagency Development Budget Coordination Committee (DBCC) has adjusted this year’s borrowing program from P631.3 billion to P727.64 billion.

She, however, said the revision was not due to higher borrowings last April, based on reports, but because of the budget deficit target of 3 percent of gross domestic product (GDP).

Bureau of the Treasury (BTr) data show that financing at the end of the first four months this year reached P275.098 billion, lower than year-ago’s P319.098 billion.

For April, government financing amounted to P187.65 billion, lower than the P202.65 billion same period in 2016 but higher than the previous month’s P26.08 billion.

The month-on-month uptick was mainly due to the sale from March 28 to April 6 of three-year retail treasury bond (RTB), from where the government gained some P175 billion.

For 2018, the government plans to borrow around P889.72 billion, 22 percent higher than this year’s programmed borrowing program.

De Leon said that for both years, borrowings would be biased for domestic fund sources than off-shore creditors, at an 80 to 20 ratio.

“We don’t have a breakdown of how much we will borrow, in terms of our commercial borrowing and our ODA (official development assistance). That is still a work in progress,” she also said.

Panda market foray not final

De Leon said the plan to tap China’s bond market for the Philippines’ planned maiden Panda bond issuance remained on the table.

She explained that “we still have to see the emerging developments in the Panda market so we have not really definitely said that we will go to the Panda market.”

“It will be a maiden issuance so we have to learn the process and learn the market more and make sure that whatever rates we get will also be competitive for the secondaries of our issuances right now,” she said.

Panda bond is a renminbi-denominated debt paper issued by a non-Chinese issuer in China.

Finance Secretary Carlos Dominguez III earlier said Philippine finance officials were in talks with a Chinese financial institution for a possible Panda bond issuance in the second half of 2017.