The Philippines plans to source up to 75 percent of its government borrowing from the domestic market as it seeks to limit foreign-exchange risks while bringing down its budget deficit and easing taxes on workers and small businesses.
Finance Secretary Frederick Go said the government aims to keep about 70 to 75 percent of its borrowings in pesos and 25 to 30 percent in foreign currencies this year and next.
“Our goal is to keep increasing the domestic portion,” Go said in an interview with Bloomberg in Hong Kong.
The strategy comes ahead of the inclusion of Philippine peso-denominated government bonds in J.P. Morgan’s Government Bond Index-Emerging Markets series in January 2027, a move expected to widen the investor base and improve liquidity in the local bond market.
Greater demand for peso debt could eventually help lower the government’s financing costs, with Go saying cheaper sovereign borrowing could also translate into lower funding costs for businesses and consumers.
At the same time, the government is targeting a narrower fiscal deficit of 5.4 percent of gross domestic product this year and 5.2 percent next year, before bringing it down to 3.5 percent by 2030.
Go said meeting the targets would require a “whole-of-government approach” focused on fiscal discipline, smarter spending, and projects with the strongest economic multiplier.
The administration is also proposing to raise the personal income tax exemption threshold to P350,000 from P250,000 and scrap the minimum corporate income tax for micro and small enterprises.
Go estimated the tax relief would reduce revenues by about P60 billion, prompting the government to consider additional excise, health, and environmental taxes to make up the shortfall.
The policy mix reflects the government’s effort to reduce its reliance on foreign-currency debt while creating fiscal room for tax relief without derailing its deficit-reduction path.
