MANILA - The government's total borrowings are expected to decline next year as signs of economic recovery may contain the country's ballooning budget deficit.

According to National Treasurer Roberto Tan, the government is set to borrow P640.28 billion in 2010, P12.7 billion lower than this year's programmed borrowings of P652.98 billion.

Data from the Finance Department showed that the government's domestic borrowings would rise by 14% to P477.19 billion next year from P418.59 billion as it plans to issue more treasury bills and bonds. The latest figure would account for 75% of total borrowings for 2010, higher than this year's 64%.

Foreign borrowings, on the other hand, would drop by 30.1% to P163.09 billion from P234.38 billion this year. This would take up 25% of all government borrowings next year, lower than 36% for 2009.

This year, the government has raised $2.25 billion through the issuance of 10-year global-denominated bonds, and is not yet closing its doors to the international capital market.

The government borrows heavily from both domestic and foreign creditors mainly to finance the country's budget deficit, which is targeted this year at P250 billion or 3.2% of gross domestic product (GDP). Next year, it is aiming to narrow the country's budget deficit to P208.4 billion or 2.5% of GDP.

For the first 6 months of the year, the government's total borrowings plunged 2.3% to P237.18 billion as it paid maturing debts amid the country's worsening fiscal condition.