The Philippines may consider going back to the overseas debt market later this year when it has a clearer grasp of the country's fiscal position, a senior government official said on Monday. The Southeast Asian country, which relies heavily on local and foreign debt issues to bridge its budget deficit, raised $1.5 billion in a sovereign debt offer in January to cover for its commercial funding needs in 2009.
But the government last week raised its 2009 budget deficit estimate to 199.2 billion pesos ($4.1 billion), or 2.5 percent of GDP from 2.2 percent of GDP, requiring additional borrowings. "It is an option," National Treasurer Roberto Tan told reporters. "We will only come to a specific decision whether we will tap the international market in the latter part of the year once we get a handle of the domestic capital market situation."
Tan said the government may resort to foreign debt sources "if there is a sudden tightening in domestic liquidity and borrowings costs become more expensive". Manila has twice raised its domestic borrowing plan for the year after it widened its 2009 budget deficit estimate for the second time in nearly 2 months last week due to a slowing economy.
It now aims to borrow 463.1 billion pesos from the domestic debt market, 21 billion pesos more than previous plan of 442 billion pesos, to fund a larger deficit of 199.2 billion pesos this year and make up for lower state revenues. The economy is now projected to grow 3.1-4.1 percent this year from a previous 3.7-4.4 percent estimate due to weak exports. The slower growth estimate for the year has forced the government to slash the revenue target of the country's main tax agency by 15 billion pesos to 850.6 billion pesos.
The government is due to release data on Wednesday showing its fiscal performance in March. It has targeted a 110 billion pesos budget deficit for the first three months of 2009, based on its previous full-year deficit target of 177.2 billion pesos.