Gov’t to source nearly 100% of debt needs locally

MANILA, Philippines – Nearly 100% of the Philippine government’s debt requirements for 2013 would be sourced locally, Finance Secretary Cesar Purisima said.

Speaking at an Asian Development Bank press briefing on Monday, March 18, Purisima confirmed that the government plans to borrow mainly from domestic creditors in line with its bid to reduce foreign debt and develop the Philippine bond market.

“For this year, as already announced by the Treasurer of the Republic of the Philippines, we intend to borrow almost 100% of our borrowing requirements from the local capital market,” he said.

The decision to borrow locally comes amid record-low interest rates and robust money supply.

“There’s enough liquidity in the market to do so. We’re coordinating closely with the central bank to make sure the policies support each other,” Purisima explained on the sidelines of a Bureau of Internal Revenue press briefing, also on Monday.

Debt management has been one of the Aquino administration’s top fiscal reforms. Since the start of its term in 2010, it has launched transactions to lengthen debt maturities and change the mix in favor of domestic borrowings, to protect the economy from fluctuating foreign exchange rates and in pursuit of an investment grade rating.

In 2012, 64% of the Philippines’ outstanding debt came from domestic sources, while 36% came from foreign lenders. The domestic component of the debt grew 20.7% year-on-year, while foreign debt declined 5.3%. – Rappler.com

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