The Philippines is poised to borrow $5.4 billion by 2570, representing 46% of its budget, in an attempt to revive the economy. It also plans to expand its budget deficit to 5.1% of GDP to increase fiscal room for growth.
On August 11, 2569, at 12.08:XNUMX a.m., Bloomberg News reported that The Philippine government plans to borrow 3.3 trillion pesos, or approximately US$5.4 billion, by 2570, an increase of about 20% from this year. To boost spending and stimulate the economy after being affected by conflicts in the Middle East and domestic corruption problems.
Data from the Philippine Department of Budget and Management indicates that the borrowing plan represents approximately 46% of the proposed 2570 national budget of 7.2 trillion pesos, and is higher than the revised 2569 borrowing plan of 2.73 trillion pesos.
The government has also revised its target for the budget deficit as a percentage of gross domestic product (GDP) next year upwards to 5.1% from the previous target of 4.8%, to allow for increased government spending to support economic growth. Meanwhile, outstanding government debt as of June stood at 19.07 trillion pesos, or approximately 66% of GDP.
President Ferdinand Marcos Jr. specify that Next year's budget will focus on reforms for long-term development amidst global economic uncertainty. Despite geopolitical tensions, ongoing inflationary pressures, and energy price volatility, the government remains focused on creating resilient growth while maintaining fiscal discipline.
The borrowing plan is likely to be closely watched by foreign investors, as the Philippines is vulnerable to oil price volatility, importing more than 90% of its oil from the Middle East. The impact of the Iran-Iran conflict is further pressuring the economy, which was already slowing due to corruption in government construction projects that affected government spending, businesses, and households.
The Marcos government was also preparing to raise a tax known as... “Sin Taxes” For soft drinks, e-cigarettes, and alcoholic beverages, the revenue will be used to support economic stimulus measures. At the same time, there are plans to reduce the tax burden on households and provide subsidies to mitigate the impact of rising energy prices.
Regarding the borrowing structure, the Philippine government plans to raise 2.39 trillion pesos from the domestic market, a 24% increase from 1.92 trillion pesos this year, representing approximately 72% of total borrowing.
Regarding foreign borrowing, the target is 915,000 billion pesos, an increase from approximately 815,500 billion pesos in 2569, including loans from multilateral financial institutions such as the World Bank and the Asian Development Bank (ADB).
Of that amount, the government plans to raise 366,000 billion pesos through the international bond market, an increase from 314,400 billion pesos this year. By 2569, the Philippines has already raised $5.25 billion through global bond issuances.
Fiscal and economic concerns have been reflected in financial markets, with Philippine government bonds being one of the worst-performing emerging market assets this year. Investors who calculated returns in dollar terms and hedged against exchange rate fluctuations suffered losses of approximately 5%, while the peso depreciated by 3.7%.
The government proposed a budget of 7.2 trillion pesos for 2570, a 6% increase from this year's 6.79 trillion pesos, while targeting a budget deficit of 1.69 trillion pesos, higher than the revised ceiling of 1.66 trillion pesos for this year.
Budget Minister Kim Robert de Leon stated that the budget would prioritize supporting economic growth through strategic investments in infrastructure, education, public health, food security, and social protection systems.
refer : bloomberg.com
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