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September 4, 2008

Philippines to raise $1.5bn to boost reserves
The Philippines expects to raise $1.5 billion in sovereign debt and $1.1 billion from official development loans to fund its 2009 budget deficit and boost its foreign reserves and balance of payments surplus, reported Reuters.

National Treasurer Roberto Tan said on Wednesday the government has not yet decided on a plan to return to the foreign debt market later this year with an issue of up to $750 million.

"We're trying to get a clearer picture of how disbursements will go in the fourth quarter," he said, adding that a decision could come this month.

The Philippines, which needs to borrow at home and abroad to finance its budget deficit, also plans to tap the local market for 321.5 billion pesos ($6.9 billion) in new funds next year, 3.4 percent less than this year.

Finance Secretary Margarito Teves told reporters the government would likely raise debt issues to $1.5 billion next year from just $500 million so far this year.

The 2009 budget deficit goal of 40 billion pesos, or half a percent of gross domestic product, compares with an estimated shortfall of up to 75 billion, or 1 percent of GDP, this year.

Manila also wants to raise at least $550 million from selling a 40-percent stake in oil refiner Petron Corp and 16-18 billion pesos by auctioning a similarly sized stake in state oil and gas explorer PNOC-Exploration Corp  before the end of this year, Teves said.

Proceeds from those sales will help offset lacklustre tax revenues and finance higher infrastructure spending due later this year, a plan aimed at propping up economic growth.

Central bank Deputy Governor Diwa Guinigundo said foreign reserves may reach $39-40 billion next year, up 5 to 8 percent from an estimated $37 billion this year.

Strong inflows of remittances from the country's huge overseas workforce would likely support a healthy Philippine external payments position. Remittances hit a record in June.

"That will continue to be a main source of foreign exchange inflows," said central bank Governor Amando Tetangco, referring to cash sent home by Filipinos working abroad.

Foreign reserves stood at a record $36.9 billion at the end of July while the balance of payments surplus was at $2.1 billion in the first seven months, more than halved from a year earlier.

"It's a surplus this year and it will be surplus again next year," Tetangco told reporters on the sidelines of a congressional hearing on the 2009 budget bill.

Manila expects a full-year surplus of $2.5 billion, sharply down from $8.6 billion in 2007 due to weak exports and less portfolio and direct foreign investments.

Foreign reserves have so far held up despite the central bank's aggressive dollar sales to slow the weakening of the peso <PHP=>, which fell to its lowest in nearly a year this week.

Tetangco said the peso's slide in the past days had been "rather fast". The currency, which fell to 46.74 per dollar in early trade on Wednesday, has lost 2.3 percent in just three days due to higher demand from importers and the general weakness of Asian currencies, Tetangco said.

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