Philippines to reduce foreign borrowings in 2008

The Philippines will be borrowing less from foreign sources next year and more from local creditors in order to tame the peso's rise against the US dollar, Finance Secretary Margarito Teves said Wednesday.

In an interview with reporters Teves said the government plans to trim foreign borrowings by P20 billion to P21 billion next year, which it will instead borrow from domestic sources.

“That simply means that given our borrowing program next year, we will be adding P20 billion to P21 billion out of domestic borrowing and reducing the same amount from external borrowings," Teves said.

This, Teves said, translates to a borrowing mix of 70 percent from domestic sources and 30 percent from foreign creditors versus the original program of 64 percent from domestic and 36 percent from foreign sources.

The Finance Secretary said these changes take into consideration the proposal of the Bangko Sentral ng Pilipinas to source more funds domestically to help cushion the impact of the strong peso on the earnings of exporters and overseas Filipino workers.

“We are looking at a situation where we would like to help the export sector but would also like to see that this is neutral to advantageous to the government. We are trying to balance between interest cost and our support for the exporters and the overseas Filipino workers," Teves said.

The government through the Development Budget Coordination Committee has pegged the foreign exchange assumption this year and next year at P46 to P48 versus $1.

However, statistics from the Bangko Sentral ng Pilipinas (BSP) showed that the peso averaged P45.063 to $1 as of September. The peso has appreciated by 11 percent so far this year.

The Philippines intends to borrow P346.18 billion from both foreign and domestic creditors next year, P47.83 billion lower than the programmed borrowing of 394.01 billion this year. - GMANews.TV

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