ASEAN KEY DESTINATIONS
Philippine finance debt prepayment nixed
THE Aquino administration has turned down a Bangko Sentral ng Pilipinas (BSP) proposal to pre-pay the government's foreign debt amid the country's high dollar reserves. Finance Secretary Cesar Purisima said the government is more inclined to undertake more debt exchange.
"We're continuing to look at the market with opportunistic eyes. Therefore, when there are opportunities to swap our debt, that's one way of achieving that," he said.
The BSP has been egging on the government to prepay its foreign obligations as the country's gross international reserves (GIR) already hit a record high of $62.1 billion at end-2010.
"You just call it pre-payment but you can actually do all sorts of actions to make that happen. You can engage in more sophisticated financial instruments but clearly, when the opportunity is there to do so, we will continue to do so," Purisima said, citing the recently concluded $1.25-billion global peso bond sale, the second such offering after last September's maiden issuance.
"You see, we are going to use such amount to refinance our maturing foreign obligations next month, worth $1.25 billion. The interest rate for such maturing loan stands at 8.375 percent, whereas the loan that we got for paying that obligation is only at 6.25 percent," the finance chief said.
National Treasurer Roberto Tan earlier said the peso appreciation and penalties arising from any prepayment of official development assistance loans have discouraged the government from settling these obligations ahead of their due date.
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