Government can borrow from either domestic or international creditors regardless of amount and time of the year as long as the funding will not exceed the borrowing program, the Department of Finance (DoF) clarified.
The DoF made the clarification in response to speculations that the Bureau of Treasury (BTr) completed at least 70 percent of total government borrowing program for 2012.
The target for 2012 is P175.284 billion.
“It doesn’t matter because we look at the market conditions, interest rates and spreads before doing so. If we forecast that it is not ideal, then we backpedal and move or advance the borrowing,” Undersecretary Lea de Leon explained to the Daily Tribune.
The DoF is mandated, under the Constitution, to provide the budgetary requirement of the republic. It is also tasked to plug the deficit either in budget or tax collection through borrowing from any sources.
De Leon said the borrowing program for each year is carefully prepared by the interagency Development Budget Coordination Committee.
The DBCC is composed by the Departments of Finance, Budget and Management, National Economic and Development Authority and Bangko Sentral ng Pilipinas.
De Leon is the head of the International Finance Group, the main arm of the DoF that deals with international creditors for global bond flotation.
She said exceeding the borrowing program has repercussions with international creditors, something the DoF doesn’t want to happen that’s why it carefully manages its financing program.
“If you cannot follow what  you target, creditors might think you are not carefully preparing for the year. That’s not good as far as economic management is concerned,” de Leon, who obtained a postgraduate degree from the prestigious Williams College, explained.     
Her statement was supported by another DoF official who declined to be identified.
“Under the law, there is limit on public debt. We monitor that carefully and we avoid getting over,” the high ranking official said.
The official said interest rates are the main determinant if any government will advance its borrowing program for any year.
“Like an ordinary borrower, nobody wants to borrow if the interest rate is high.
Usually, Bobby (Roberto, the national treasurer) adjusts fourth quarter borrowing. Usually, interest rates are higher in fourth quarter so we cut borrowing for that period and do more at earlier time,” he added.