President Marcos’ chief economic manager stated that the national government plans to reduce its foreign borrowings to 10 percent over the medium term, making the domestic borrowings stand at 90 percent.
This came after the Department of Finance (DOF) Secretary Ralph G. Recto affirmed the possibility of double bonds—Eurobonds and dollar bonds—next year.
Recto told reporters during an informal press chat on Tuesday, Dec. 17, that the government is considering all bond options but also aims to limit and reduce foreign borrowings.
“We’re considering all of them, but we want to limit our foreign borrowings. We want to reduce that. So next year, I think it’s 75-25. Possibly even 80-20. I think the plan is to reduce that to 90-10,” he said.
Data from the Bureau of the Treasury showed that the national government’s debt reached P16.02 trillion by the end of October 2024. Of the total debt, domestic securities accounted for 67.98 percent, and foreign debt accounted for 32.02 percent.
Recto suggested the timeline of incremental reduction could extend beyond 2028, explaining that the borrowing mix could shift from 70:30 to 75:25, 80:20, or even 85:15, with the ultimate goal of reducing foreign exchange risk to 10 percent, favoring 90 percent domestic borrowing.
While this strategy may extend beyond the Marcos administration, the finance chief asserted that the main focus is on establishing the goal and “setting that in motion.”
Meanwhile, Recto said that the government is heading towards an 80:20 borrowing mix in 2025, gradually leading to the 90:10 goal ratio.
As for the issuance of Eurobonds next year, Recto confirmed that he has already given his approval.
“I think it’ll be a mix [of Eurobonds and dollar bonds], but I leave the details for the meantime with the Treasury,” he said, which will be available in the first half of 2025.
He also affirmed that Sukuk—a Sharia-compliant financial instrument—would be part of regular financing, noting strong demand from the Middle East.
“There’s appetite, appetite for the Middle East. You want more people buying our bonds, our notes, and so on and so forth. If they [investors] are willing to finance government operations, why not?” he further said.