The Philippines has cut further its goal for overseas debt issues in 2007 to $900 million from an earlier-reduced target of $1.2 billion as it seeks more official development loans and local debt, a senior state official said.
The country also plans to prepay its remaining loans worth $217 million with the International Monetary Fund (IMF) as part of a government debt reduction scheme and to take advantage of strong dollar inflows, government sources said.
The Philippines, scheduled to exit in April from a post-programme monitoring arrangement with the IMF, did not indicate the timing of its prepayment but the debts - used for balance of payments support - were due to be fully paid in 2010, the sources said.
Finance Secretary Margarito Teves told reporters over the weekend an inter-agency committee setting the country's economic targets agreed to adopt a 67-33 percent financing mix in favour of local debts next year from about 60-40 ratio this year.
"Now we're looking at something like $900 million (for debt market issues) while $1.3 billion would come from programme and project loans," Teves said.
"This is good because you have lower interest rates and longer repayment terms. This is assuming we continue to get enthusiasm from bilateral and multilateral donors," he said.
The government has set total overseas borrowings worth $2.2 billion next year to help fund its budget deficit expected at 63 billion pesos ($1.3 billion) or 0.9 percent of gross domestic product from a target of 125 billion pesos or 2.1 percent of GDP this year.
Teves said in September the government planned to borrow $1.2 billion from overseas debt markets and $1 billion from multilateral lending agencies like the World Bank.
MORE WORLD BANK LOANS:
The World Bank has stepped up its lending to the Philippines this year - with total loans of about $410 million in the fiscal year 2005/2006 seen as the highest in at least seven years - following the government's success in bringing down its budget deficit and raising revenues.
It has said plans to raise further its lending to the country would depend on the progress of the fiscal consolidation programme.
The Philippines, which relies heavily on foreign and local borrowings to fund its budget deficit, raised $2.85 billion from the overseas debt markets this year, down from an original plan of $3.1 billion, as the government took in more revenues aided by sales tax reform.
The government favours more domestic borrowing than foreign debt issues to cut the risk of foreign currency fluctuation, reduce its debt of $79 billion, and balance its budget by 2008.
Total debt of the central government at the end of August was 3.954 trillion pesos, up 0.8 percent from July, latest data from the finance department released on Sunday showed.
An IMF mission is currently in Manila for twice-yearly post-programme monitoring talks with economic officials.
Amando Tetangco, central bank governor, said last week the central bank would look for other debt pre-payment possibilities to cut interest costs and reduce the government's debt burden.
The central bank had said it would prepay a total of $1.17 billion of its own foreign debt this year while the central government redeemed costly Brady bond issues earlier this year.
The government also said last week it would prepay $70 million worth of loans with the Asian Development Bank.
The country's gross international reserves hit a record high of $22.27 billion at the end of October, boosted by sustained dollar inflows from Filipinos working overseas, strong exports and continued inflow of foreign portfolio and direct investments.