PHL eyes pre-paying development loans

The Philippines is mulling over pre-paying development assistance loans from multilateral lenders, starting this year, taking into consideration the huge amount of money circulating in the financial system, a Cabinet official said. “We're looking at some ODAs (official development assistance loans) that we can pre-terminate, that have relatively higher cost than typical ODAs,” Finance Secretary Cesar Purisima told a press roundtable on Thursday. ODAs are official financing from multilateral or bilateral lenders, like World Bank, Asian Development Bank (ADB), International Monetary Fund, and aid agencies. It is aimed at promoting economic development and welfare of developing countries and has relatively low interest rates than commercial loans. Asked for a ballpark figure on planned pre-payments, Purisima said, “it depends on how much we can find. Where there's a willing seller, or where there's a willing partner that will want to pre-terminate our debt.” The government could issue onshore debt papers—either peso or dollar bonds—which remain at low yields, the Finance chief said. “That should help ease pressure on the peso, and it's in line with our plan to borrow from the local market,” Purisima added, noting government debt is 100 percent sourced for domestic creditors so far this year. Purisima noted a bond issuance could “siphon” off excess liquidity in the financial system. On Friday, Reuters quoted National Treasurer Rosalia de Leon as saying that the government is eyeing to pre-terminate ODA loans with ADB. — VS, GMA News