MANILA, Philippines – The Philippine government plans to reduce its reliance on foreign borrowings to minimize exposure to foreign exchange risks, according to Department of Finance (DOF) Secretary Ralph Recto.

In a recent press briefing, Recto explained that while the government is considering various bond issuances—including Euro, Yen, Sukuk (Islamic bonds), and Dollar-denominated bonds—the priority is to reduce foreign debt. He outlined a plan to decrease foreign borrowings to no more than 10 percent of the total borrowing mix over the medium term.

“We’re considering all of them, but we want to limit our foreign borrowings. We aim to reduce this, so for next year, the borrowing mix will likely be 75-25. We might even shift to 80-20,” Recto stated.

The government’s gross borrowings for 2024 are expected to reach PHP2.570 trillion, slightly decreasing to PHP2.55 trillion in 2025. This year, the financing mix is split between 75 percent domestic and 25 percent foreign borrowings. From 2025 to 2028, the government plans to shift toward a higher proportion of domestic borrowing, targeting an 80-20 ratio.

“We aim to reduce this to a 90-10 ratio. Not immediately, but over the medium term. It could take longer than 2028, but we’re setting the plan in motion,” Recto said. He emphasized the government’s goal of progressively reducing foreign exchange risks by increasing the share of domestic borrowing.

Recto also noted that while the 90-10 borrowing mix may be implemented by the next administration, the plan is already underway, laying the groundwork for the future.

Bond Issuances

On the subject of bond issuances, Recto said the government is exploring the possibility of issuing Euro and Dollar-denominated bonds in the first half of 2025. The Bureau of the Treasury (BTr) is also considering including Sukuk (Islamic bonds) and Yen-denominated bonds in its financing strategy next year.

“There is demand, especially from the Middle East. If investors are willing to finance government operations, we should take advantage of that,” Recto said, referring to the Sukuk bonds that raised USD1 billion for the Philippine government last year.

Regarding Yen-denominated bonds, Recto highlighted that the depreciation of the Japanese yen could work in the Philippines’ favor. “The yen is depreciating, so this is an opportune time for us to borrow. But more importantly, we want to raise the Philippines’ profile with Japanese investors,” he added.

By exploring diverse sources of financing, the government aims to strengthen its borrowing capacity, reduce dependence on foreign exchange fluctuations, and maintain access to international markets.

📷 Presidential Communications Office