MANILA - The government is planning to sell yen-denominated bonds to plug a ballooning deficit and support economic pump-priming efforts, officials said.

"We may get additional funds by issuing samurai bonds," Finance Undersecretary Gil S. Beltran told reporters over the weekend.

This was confirmed by National Treasurer Roberto B. Tan, who said in a telephone interview yesterday: "That is being discussed with Japanese authorities. That is one of the sources [of funds] we are pursuing."

"[The proceeds will be used] for budgetary support. It will be part of the general expenditures," he added.

Mr. Tan said the securities will be sold in the Japanese market to take advantage of a Japan Bank for International Cooperation (JBIC) offer of a guarantee.

"The JBIC guarantee will be an enhancer. The Japanese market is not very familiar with the markets outside Japan and investors would need an enhancement," he said.

Details of the bond sale are still being discussed, Mr. Tan said. He added that the issuance would be on the agenda for President Gloria Macapagal-Arroyo’s visit to Tokyo this week.

"It will be discussed during the president’s visit," the national treasurer said.

Rosalia V. de Leon, officer-in-charge of the Finance department’s international finance group, said the JBIC guarantee would provide a sense of security to investors.

"This is an initiative of the Japanese government to help the region amid the financial crisis. Because of the JBIC guarantee ... the costs may be less, spreads may be lower. It would also enhance the credit rating of the issuance," she said.

In 2000, the government sold five-year samurai bonds worth ¥55 billion or around $325 million at a coupon rate of 3.2 percent.

Last January, the government floated $1.5 billion worth of 10-year securities at a yield of 8.5 percent to the global bond market, the first offering by an Asian borrower this year.

Economic managers last week raised this year’s deficit cap to P250 billion or 3.2 percent of gross domestic product from P199.2 billion previously.

Finance officials said the higher deficit would require the government to hike its borrowings. Among the funding sources being considered are official development assistance as well as the foreign and local bond markets.