DoF is waiting for interest rate cuts before borrowing abroad

By means of John Victor D. Ordoñez, News reporter

THE PHILIPPINE government will wait for interest rate cuts from the US Federal Reserve and Bangko Sentral ng Pilipinas (BSP) before embarking on its planned external borrowing Next year, according to the head of Finance.

“We are waiting for the Fed to cut rates, and I think the Philippines, our central bank, will also cut policy rates,” Treasury Secretary Ralph G. Recto told reporters in the Senate when asked about the planned borrowing from the government next year. .

For 2025, the national government has set its borrowing program at 2.55 trillion euros, 0.97% lower than the 2.57 trillion euros this year.

Gross domestic borrowings for 2025 are pegged at P2.04 trillion, while gross external borrowings are pegged at P507.41 billion.

Mr. Recto told reporters earlier this month that the government plans to issue Japanese yen- and U.S. dollar-denominated bonds within the year.

When asked Tuesday about plans to issue these bonds, he replied: “We’re going to start now.”

The Philippine central bank, which has previously kept interest rates steady at 6.5% in the past six meetings Ffell short of a possible 25 basis points (bp) cut at the August 15 meeting.

The US Federal Reserve is expected to keep interest rates steady during a two-day policy meeting this week, Reuters reports.

“By waiting for possible rate cuts from both the Fed and the BSP, the government aims to secure more favorable terms for its international debt issuance,” Security Bank Corp. chief economist Robert Dan J. Roces said. in a Vibes message.

“To maintain low interest rates on its substantial domestic borrowing plan, the government could focus on… implementing fiscal consolidation, promoting investor consolidation.Fidentity, which can help the country achieve its financing goals while keeping debt costs in checkFfective.”

Jonathan L. Ravelas, a senior advisor at professional services firm Reyes Tacandong & Co., said in a Viber message that the government should focus on boosting its revenue collection and e-commerce.ffopportunity to reduce debt.

“There needs to be a balance in infrastructure spending to boost growth while keeping agency spending under control,” he said.

Mr Recto, a member of the central bank’s policy-setting Monetary Board, said earlier that the country was on track for a cut in interest rates this year.

The BSP’s next policy meeting is on August 15.

“Given the limited financial resources of the national government, it (the government) needs to better manage the country’s debt in the long term,” said Michael L. Ricafort, chief economist of Rizal Commercial Banking Corp. in a Viber message.

“Foreign borrowing should also be reduced and we should increase local borrowing to control currency risks, as a matter of prudence.”