The Philippine government may cut its domestic borrowing in the fourth quarter given its stronger fiscal performance and smaller-than-planned spending budget this year, National Treasurer Omar Cruz said on Monday.
The Philippines, Asia's largest sovereign debt issuer after Japan, reduced its 2006 foreign borrowing by about $250 milllion to $2.85 billion when it issued just $750 million in reopened sovereign bonds last week, its last overseas offer this year.
Manila originally planned to issue a total of $3.1 billion in overseas debt this year.
"I would have to look at the fourth quarter. There are still a number of variables," Cruz told reporters. "We will finalise that as we approach the end of this quarter and as we enter the new quarter." The Treasury would have to decide, depending on market demand, whether to cut the T-bill or T-bond issues in the fourth quarter, Cruz said.
Cruz previously said the government would cut its debt issues this year under a rolled-over budget from 2005 but would keep the borrowing mix at 58-42 percent in favour of domestic debt.
"On the whole, we have a great deal of flexibility to be able to manage it according to our debt strategy, which is a preponderance of domestic debt," he said. The government originally planned to borrow 310.2 billion pesos ($6 billion) from the domestic market this year to partly fund its proposed 2006 budget of 1.053 trillion pesos.
The government has so far raised 166 billion pesos from the local market and plans to raise 52 billion pesos more in August and September. The borrowing from January to the end of the third quarter would comprise 70 percent of the government's local debt needs this year. Its remaining debt requirement would be 92.2 billion pesos.
The government has yet to announce its borrowing programme for the fourth quarter.
This year's budget remains in limbo due to bickering between President Gloria Macapagal Arroyo and her foes in the upper house of Congress.
Arroyo submitted a proposal to Congress for an additional budget of 46.4 billion pesos this year to fund priority projects that would not be covered by the smaller 2005 budget of 908 billion pesos.
Under the planned 2006 budget, Manila set a deficit target of 125 billion pesos, or 2.1 percent of gross domestic. Officials have said this year's shortfall could be much smaller because of the lower spending plan in a rolled-over budget from 2005.
The Philippines had a budget deficit of 31.5 billion pesos in January to June, far below the target of 90.4 billion pesos. The shortfall last year was 146.5 billion pesos, or 2.7 percent of GDP.