MANILA - The Bureau of Treasury remained coy on how it will fund the widening budget deficit.

With the deficit leapfrogging from P40 billion to P250 billion--with strong likelihood that this figure will still increase--the Treasury has been sending mixed signals on how to plug it. The Philippines relies heavily on borrowings to plug the deficit at the same time pare down its debt stock.

Market players have been keen on a more definitive debt plan especially after Treasury indefinitely postponed the issuance of local retail treasury bonds scheduled next month.

Domestic borrowings has been increasing as a proportion of the national government's borrowings mix. It used to be 70:30, in favor of foreign borrowings.

How much it would tap from foreign commercial markets this time remains unclear.

In an interview with reporters after Monday's auction of Treasury bills, National Treasurer Roberto Tan said the government may end up issuing global-denominated bonds and Samurai bonds depending on the demand and the market condition.
 
“We are considering both the Samurai bonds and the option of a commercial borrowing. It (commercial borrowing) is still there available for us,” Tan stressed.
 
During the state visit of President Gloria Macapagal Arroyo in Tokyo recently, the Philippine government inked a memorandum of understanding with the Japan Bank for International Cooperation on the planned issuance of Samurai bonds.
 
The last time the Philippines issued Samurai bonds was way back in December of 2001 when the government successfully raised Japanese Yen 50 billion to finance its general budgetary requirements.
 
Tan made the pronouncement after the government allegedly sought the approval of the central bank’s Monetary Board for a $1 billion global bond issuance.