THE national government has programmed its total gross borrowings for 2019 at P1.19 trillion, which is higher than the programmed P986 billion set for this year, on the back of the adjusted deficit ceiling of 3.2 percent, according to the Bureau of the Treasury (BTr).

National Treasurer Rosalia V. de Leon told financial reporters on Monday that the government has set its programmed gross borrowings for 2019 at P1.19 trillion, with external borrowings accounting for P297.2 billion of the total and domestic borrowings at P891.7 billion for the year.

“It’s P1.19 trillion [next year] because [we have a] higher deficit [amounting to] P673 billion. And then we have some maturities also,” de Leon said.

She explained that the higher gross borrowings for next year is in line with the adjusted budget deficit of 3.2 percent for the same year as reported by the Development Budget Coordination Committee (DBCC) earlier in July, to further maintain the progress of the Duterte administration’s infrastructure buildup program, or “Build, Build, Build” (BBB).

De Leon also pointed out that the 75:25 borrowing mix ratio is not set in stone, as the government is taking a cue from market conditions, looking out for opportunities in terms of issuances favorable to the government.

“For next year, so it all depends on how the market, both external and domestic, plays out. If we can…tap more going into next year, then we can go into that 75:25 [mix]; }otherwise we’ll have to see if there will also be good opportunities for doing more external financing—new external, meaning to say it’s not just our commercial borrowings but even the ODA [official development assistance]; we can increase our program loans,” de Leon explained.

Earlier in the month, the DBCC had adjusted the country’s borrowing mix for next year to a 75:25 ratio, still favoring domestic lenders, coming from a 65:35 borrowing mix this year. The deficit ceiling programmed by the DBCC for 2018 is at 3 percent.

Finance Secretary Carlos G. Dominguez III pointed out that the larger programmed share of domestic borrowings for 2019 will enable the Philippine economy to better hedge against foreign-exchange risks, while the increase in the deficit from 3 percent to 3.2 percent was explained as being in line with the acceleration of government’s investments in its social services program, among others.

“We want to accelerate the BBB program and we are accelerating investments in education and social services including health, so this is why we are going to propose to the President an increase of .2 percent of the 3-percent deficit we projected,” Dominguez said.

In nominal terms, external borrowings for 2018 translates to P346 billion while programmed domestic borrowings is at the P640-billion level, under the 65:35 borrowing mix ratio.

The total gross borrowings programmed for 2019 represents an expansion of 20.6 percent compared to the programmed total borrowings for this year of P986 billion.

In May this year, Deputy Treasurer Sharon P. Almanza told financial reporters that commercial borrowings programmed for 2018 is at the $4.2-billion level, with ODA at $2.5 billion.

The Philippine government earlier bared plans to issue samurai bonds worth $1 billion by the third or fourth quarter of 2018, as part of its financing exercise for the year.

In March the three-year Panda bond issued by the government fetched a coupon rate of 5.00 percent, a tight spread of 35 basis points above benchmark rates, and is worth 1.46 billion in renminbi (RMB).

In January this year, the Philippine government also successfully offered $2 billion new 10-year global bonds, with the bonds priced on a par with a coupon of 3.00 percent, tighter than the initial pricing guidance of 3.300 percent area.

The government is looking to issue another Panda bond and global bond, with the issue dates still being decided by the government.

“So we are going to the samurai [bond market] and then we will start the process for the Panda [bond] because it will take some time. And we are also looking at sukuk [bonds]—there are still some regulatory challenge—and then we are also looking at the euro market,” she added.