RP Gov't cuts Dollar Borrowings in Favor of Peso

In the Inquirer, the RP gov't is considering cutting dollar-denominated foreign borrowings in favor of peso-denominated local loans to ease pressure from the rising peso.

"The government may further cut its 2008 foreign borrowings in favor of domestic loans to ease the impact of a strengthening peso on exporters and families of overseas Filipino workers, Finance Secretary Margarito Teves said.

Teves said the government’s recently revised borrowing mix of 70 percent domestic and 30 percent foreign -- from the previous 64:36 -- could still be changed.

“As of the moment, this is the borrowing program,” Teves said at a news briefing Tuesday. “But the government could stretch it further to 75:25 in favor of more domestic borrowings depending on opportunities.”

Teves said a 30-percent foreign borrowing share next year would translate to $2 billion, or P90 billion at the exchange rate of P45 to the dollar that government officials use.

A 25-percent foreign share would be $1.67 billion, or P75 billion.

The peso recently broke into the 41-per-dollar territory, averaging 46.6 to the dollar from January to November.

The 2007 government budget had assumed an exchange rate of P47-P49 per dollar."