The Ministry of Finance plans to finance the forecast deficit from the domestic capital market, as well as from external funders. The bulk of the funding is expected to be sourced through the domestic note issuance programme, a P55 billion multi-year instrument through which government borrows from the local market via the BoB.
Thus far this financial year, government has raised gross proceeds of P29.3 billion from the domestic capital market, as the prolonged diamond slowdown has eaten into its revenues. However, the high quantum of fundraising – which compares with P17.7 billion in the prior year – has raised concerns of a crowding out of other borrowers, as well as a sucking up of liquidity in the market.
