BTr eyes less December borrowing

The Philippine government plans to borrow less from the domestic market next month, the Bureau of the Treasury (BTr) said on Thursday, amid a shrinking budget deficit that eases the pressure to finance its debt.

The December borrowing plan is 73% lower than the PHP 225-billion program in November and 60% less than what it raised this month, the BTr said in a memo posted on its website.

The government will borrow PHP 20 billion via Treasury bills and PHP 40 billion via Treasury bonds.

It will sell PHP 3 billion each in 91- and 182-day securities, as well as PHP 4 billion in 364-day T-bills on Dec. 4 and Dec. 11.

The Treasury will also auction off PHP 20 billion each in 10-year and 15-year bonds on Dec. 5 and 12, respectively.

The lower borrowing coupled with a positive outlook for the Philippine economy would likely lead to high demand for both T-bills and T-bonds, analysts said.

The state is borrowing less next month given the shrinking budget gap, Domini S. Velasquez, chief economist at China Banking Corp., said in a Viber message.

Ms. Velasquez said the smaller borrowing via Treasury bills should boost the market rally and aid the decline in interest rates.

“This decision is influenced, in part, by the projected smaller budget deficit for 2023 compared with the initial program,” she said. “As we approach the final months of the year, the government still has around PHP 481.5-billion fiscal space available, which is unlikely to be fully utilized.”

The Philippine government’s budget deficit shrank in October as revenue growth outpaced spending, the Treasury bureau said on Wednesday. The fiscal gap narrowed by 65.27% to PHp 34.4 billion from P99.1 billion a year ago.

In the 10 months to October, the budget gap narrowed by 8.45% to PHP 1.018 trillion from a year earlier. This was equivalent to 67.88% of the full-year PHP 1.499-trillion deficit program.

Revenue increased by 9.41% to PHP 3.224 trillion, which was already 86% of the target for the year.

The government sees no need to borrow more given the approaching Christmas holiday, Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said in a Viber message.

Yields would probably decline further if global crude prices and inflation continue to ease, he added.

In October, inflation eased to 4.9% from 6.1% in September and 7.7% a year earlier. This was below the Philippine central bank’s 5.1-5.9% forecast for the month.

October inflation was the slowest in three months but marked the 19th straight month that it breached the central bank’s 2-4% target. Year to date, inflation stood at 6.4%.

“The lower borrowing plan could also suggest that the government had already reached its target for the year,” Robert Dan J. Roces, chief economist at Security Bank Corp., said in a Viber message. “It is also able to fund its spending needs on the back of good revenue, notably during the holiday season.”

The gross domestic borrowing program this year is set at PHP 1.654 trillion, composed of PHP 54.1 billion in T-bills and PHP 1.6 trillion in fixed-rate T-bonds.

The government borrows from local and external sources to help fund a budget deficit capped at 6.1% of the gross domestic product this year. — By Aaron Michael C. Sy, Reporter