Domestic banks to provide almost 100% of Philippine government borrowings

Government plans to borrow US$3.7 billion from the local debt market in Q2.

The Philippines plans to borrow from banks and other domestic creditors this year to take advantage of favorable interest rates and advance reforms in the debt market, said Finance Secretary Cesar Purisima.

This will also help develop the bond market further, he noted. The Department of Finance will also take a closer look at the system involving bond traders to make the market more efficient.

For the second quarter, the government plans to borrow US$3.7 billion from the local debt market. The amount is 25% higher than the total it planned to borrow in the first quarter.

The government said reforms are being made in the bond market, among which is to unify into a single class both taxable and tax-exempt bonds.

"It is important that we increase the amount of credit granted to bond markets," Purisima noted. "We want to continue to reduce the intermediation margins of banks. Interest rates have gone down dramatically in the past three years," he said.