The government is eyeing the launch of foreign currency-denominated bonds before end-June, amid expectations of easing interest rates, Finance Secretary Benjamin E. Diokno said.
“Maybe towards the end of the first semester. We will try to look at the market situation. We’re not in a hurry to raise that yet because we expect interest rates to go down,” Mr. Diokno said in an interview with Bloomberg Television on Monday.
He said the government is planning to raise around PHP 5 billion (around PHP 277 billion) from the issuance of foreign bonds this year.
The government set its borrowing program at PHP 2.46 trillion this year, of which PHP 606.85 billion will come from external sources.
In 2023, the Philippine government raised USD 3 billion from its dollar bond issuance in January and USD 1.26 billion from its retail dollar bond offering in October. It also generated $1 billion from its inaugural Sukuk bond issuance, which was settled in December.
The government borrows from local and external sources to help fund a budget deficit capped at 5.1% of the gross domestic product (GDP) this year.
Mr. Diokno said that the government is so far on track to bring down its deficit-to-GDP ratio, which stood at 5.71% as of end-September 2023. The Marcos administration is targeting to lower the ratio to 3% by 2028.
“On the revenue (side), we are on track. We have even exceeded our revenue target (for 2023) and we expect that to happen (this) year because we have several tax measures pending in the upper House. I expect those tax measures to be approved by the first quarter of this year,” he said.
Latest data from the Treasury showed that the National Government’s budget deficit narrowed by 10.1% to PHP 1.11 trillion in the January-November period.
State revenues rose by 8.8% to PHP 3.6 trillion, accounting for 95.58% of the PHP 3.729-trillion target set for 2023.
For this year, the Development Budget Coordination Committee expects revenues to hit PHP 4.235 trillion, equivalent to 15.5% of GDP.
The Department of Finance (DoF) earlier said that its priority measures could generate as much as PHP 120.5 billion in additional revenues this year.
These measures include the Passive Income and Financial Intermediary Taxation Act (PIFITA), a value-added tax (VAT) on digital service providers, a new mining fiscal regime, motor vehicle road user’s tax, as well as an excise tax on single-use plastics, pre-mixed alcohol, sweetened beverages and junk food.
The PIFITA, VAT on digital transactions, and excise tax on single-use plastics are currently pending at the Senate committee level, while the excise tax on pre-mixed alcohol is still pending at the House Ways and Means Committee.
“We’re fairly comfortable with the new taxes plus increased revenue efficiency collection. We just approved the Ease of Paying Taxes Act, which was just signed by the President. We expect to be on track with revenue,” Mr. Diokno added.
President Ferdinand R. Marcos, Jr. last week signed into law Republic Act No. 19976 or the Ease of Paying Tax Act, which aims to streamline the tax system.
Under the law, tax returns may now be filed electronically or manually. It also introduces a system that puts taxpayers into micro, small, medium or large categories; and classifies VAT refund claims as low, medium, or high risk.
On the expenditure side, Mr. Diokno said government agencies must ensure “quality spending.”
“We expect around 6% of GDP to be devoted to infrastructure projects, which the economy needs,” he added.
In the 11-month period, government expenditures increased by 3.6% to PHP 4.68 trillion. This accounted for 89.42% of the full-year program.
Economic managers are targeting 6.5-7.5% GDP growth this year. — Luisa Maria Jacinta C. Jocson