Despite a budget surplus incurred in the first 5 months of 2014, the Aquino administration is still planning to borrow P135 billion ($3.09 billion) from the local market in the 3rd quarter this year.
Of this amount, P60 billion ($1.37 billion) will be in the form of treasury bills and P75 billion ($1.75 billion) will be in the form of treasury bonds, National Treasurer Rosalia de Leon said in a memorandum to all government securities eligible dealers on Friday, June 27.
Treasury bills are short-term government debt obligation, with tenors of 3 and 6 months, and one year, while treasury bonds are those which will mature more than 1 year after the date of issuance.
According to the Bureau of Treasury, it plans to sell P20 billion ($457.14 million) worth of treasury bills for each of 3 auctions, scheduled for July 7, August 4, and September 1.
Meanwhile, the government will offer 7-year, 10- year, and 20-year treasury bonds on July 22, August 18, and September 16, respectively. The bonds will have an issue size of P25 billion ($571.43 million) each for every auction.
The government recorded a budget surplus of P11.8 billion ($269.71 million) in May, resulting in a surplus of P8.5 billion ($194.29 million) in the first 5 months, the Bureau of the Treasury announced on June 26.
The 5-month surplus was “a turnaround” from the deficit position that the government had in the same period over the past 3 years, the agency noted.
In May 2013, the government recorded a deficit of P13.16 billion ($300.57 million), while the deficit for the first 5 months was P42.84 billion ($979.20 million).
The government usually borrows funds to support its budget deficit and to pay for its maturing liabilities.
The borrowing program is similar to that in the current quarter, for which the government also programmed P135 billion ($3.09 billion).
The Aquino administration is planning to borrow around P700 billion ($16 billion) next year from foreign and local sources, according to preliminary documents from the Department of Finance (DOF).
The borrowing program for 2015 is lower than the P715 billion ($16.34 billion) set for this year.
The borrowing mix for next year is 86:14, still in favor of onshore financing, according to the DOF.
The programmed local gross borrowings for 2015 is P605.1 billion ($13.83 billion), while P95.7 billion ($2.19 billion) will be sourced from the foreign market.