THE Aquino administration intends to borrow less offshore to contain its budget deficit for next year.
Finance Undersecretary Lea de Leon said the gross external borrowing plan for 2012 provides that the government would borrow $4.02 billion or only about P172 billion.

This includes overseas development loans, which declined by about a tenth as against this year’s P191.9 billion.

“The lower borrowing would translate into a lower budget deficit, and thus requires lower financing,” de Leon said.

For next year, the fiscal deficit is expected to narrow to 2.6 percent of gross domestic product, or about P270 billion, from this year’s cap of P300 billion or 3.2 percent of GDP, which is the total amount of final goods and services produced in the country.

Total borrowings this year stand at P772.9 billion, roughly 73 percent of which would be sourced from the local bond market.

Also, the sovereign may sell more peso-denominated obligations to overseas investors next year, de Leon said.

So far this year, the Philippines has sold the equivalent of $1.25 billion of global peso notes and $1.5 billion of dollar-denominated debt.

The government has embarked on a liability management program by lengthening its debt profile to avoid bunching up of maturities and shave borrowing costs. It also has issued more peso-denominated debt even in the global market to reduce currency risks.

This week, the government is scheduled to release its fiscal performance for the first half of the year. The Department of Budget and Management had said the deficit would fall below half its full year P300 billion ceiling.