RP urged to issue domestic dollar bonds

this story was taken from www.inq7money.net URL: http://money.inq7.net/topstories/view_topstories.php?yyyy=2006&mon=02&dd=20&file=6 RP urged to issue domestic dollar bonds Posted: 9:32 PM | Feb. 19, 2006 Michelle V. Remo Inquirer Published on Page B6 on the February 20, 2006 issue of the Philippine Daily Inquirer WITH the local market awash in dollars, the national government has been urged to issue dollar-denominated bonds domestically, instead of abroad, to raise the remainder of its financing requirement for the year. Albay Rep. Joey Salceda, who also serves as economic adviser to President Macapagal-Arroyo, said the government should take advantage of the huge volume of dollars that are now in the domestic market by borrowing locally. "There are too many dollars here, so we can buy dollars domestically," Salceda said at the sidelines of the "Economic Review and Outlook for 2006" organized by the Management Association of the Philippines last Friday. "Doing so would help save on borrowing cost." The government still needs to raise close to $1 billion to complete its foreign financing requirement for 2006. Under the government's fiscal program for this year, it should borrow an estimated $3.1 billion to service maturing foreign debts. Last January, it already sold $2.2 billion worth of dollar- and euro-denominated bonds. It now needs to borrow only a little over $900 million to complete its financing requirement. Salceda said that by raising its dollar requirements domestically, the government could save a significant amount of borrowing cost, considering that interest rates here are lower. He said another option was to borrow pesos, by increasing the volume of Treasury bills and bonds being issued by the government, and then use the proceeds to buy dollars from the domestic market. The surge in dollar inflows is largely attributed to the increase in remittances from overseas Filipino workers. The Bangko Sentral ng Pilipinas earlier reported that OFW remittances last year hit an all-time high of $10.7 billion. The government said the increase in OFW remittances was due to the higher number of Filipinos being deployed abroad, and to the higher-paying jobs that have become available to Filipinos. Higher portfolio investments are also credited with helping bring in more dollars to the country. Portfolio investments jumped to over $2 billion in the first 11 months of 2005 from only less than $500 million in the same period of 2004, Salceda said. The economic adviser said the increase in portfolio investments was a result of the government's improving fiscal condition. The budget deficit was kept at P146.5 billion last year, way below the target of P180 billion. copyright ©2006 INQ7money.net all rights reserved