The Bangko Sentral ng Pilipinas (BSP) gave initial approval to the government’s plan to sell bonds denominated in dollars, euros and yen as the government’s budget deficit widens, a person with knowledge of the plan said.

Monetary authorities allowed the government “in principle” to sell up to $1.5 billion of global bonds, said the person who declined to be identified before an official announcement. Separate approval was given to a plan to sell about $500 million in yen-denominated bonds, the person said.

“Once the authority from the central bank is available, we can go to the market anytime,” Finance Secretary Gary Teves told reporters Wednesday in Baguio City, a province north of Manila. Such central bank approvals are needed before the government can ask investment banks to propose plans for managing the sale.

The government needs to borrow to plug a deficit that may widen to 293 billion pesos ($6.3 billion) in 2010 from about 290 billion pesos this year, Teves said Wednesday. The Philippines has sold dollar-denominated bonds every January since 2005, according to data compiled by Bloomberg.

The Philippines plans to raise $2 billion from the sale of overseas debt next year under a previous 2010 deficit estimate of 233.4 billion pesos. As the shortfall widens, borrowing will also increase, Teves said. The government hasn’t been “officially notified” of the central bank approval, Treasurer Roberto Tan said from Hong Kong.

The Southeast Asian nation has said it may sell euro- denominated bonds for the first time in four years in 2010, issue yen-denominated securities for the first time since 2001 and continue tapping the dollar bond market as revenue falls short of spending.

The Philippines has 650 million euros ($932.9 million) of debt due in February and $561.5 million of dollar-denominated debt maturing in March, data compiled by Bloomberg show.

A euro-denominated bond sale is “exploratory” and the government is still more inclined to sell dollar bonds, Teves said. “Samurai is an opportunity for us to diversify our market and to pay off some of our yen-denominated loans,” the finance chief said. (Bloomberg)