(UPDATE) The Philippines plans to raise the amount of funds it gets from selling international bonds by more than 60% to $5.3 billion next year, as the government seeks to finance an economy stunted by a graft scandal.
The Southeast Asian nation鈥檚 overall borrowings for 2026 will only be slightly higher than this year鈥檚 but the government aims to increase the portion that comes from abroad to 25% from 19% now as part of its debt management strategy, National Treasurer Sharon Almanza said.
The government will soon pick banks to manage the first round of capital raising, which may start from the January-March quarter, Ms. Almanza said in an interview on Tuesday. The borrowing may include the issuance of debt intended for climate and social objectives, she said.
The plan comes as allegations of government corruption in flood infrastructure projects sparked mass protests, building pressure on President Ferdinand Marcos Jr. to implement sweeping reforms. The scandal has slowed economic growth and soured investor sentiment.
Yields on Philippine bonds edged lower on Wednesday. The yield on the US dollar bond due 2050 was down 1 basis point to 5.473% while the yield on the note due 2035 slipped 2 basis points to 4.721%, according to data from the Composite Bloomberg Bond Trader.
Asset managers, including Robeco Institutional Asset Management BV and Mirova SA, are reviewing their exposure to Philippine sustainability bonds on concerns they may have inadvertently financed projects that are being investigated for graft, Bloomberg News reported earlier this week.
The government is ready to reallocate ESG debt proceeds should any probe substantiate violations of law or procurement rules, and any reallocations will be fully and transparently disclosed, the Bureau of the Treasury said in a separate statement to Bloomberg.
The administration will 鈥渉ave to communicate properly鈥 so that investors get some comfort, Ms. Almanza said. 鈥淲e take any corruption allegations seriously, and we remain fully committed to ensuring that these resources are used solely for projects that deliver genuine and measurable benefits to the Filipino people.鈥
About $7.5 billion of bonds for green and social projects have been issued by the Philippine government since 2022 and sold in US dollar, euro and Japanese yen debt markets, according to the government鈥檚 sustainability bond allocation and impact report. Around P86.9 billion ($1.5 billion) of proceeds from such bonds sold in 2024-2025 were allocated to flood mitigation spending in 2023-2024.
The Department of Public Works and Highways 鈥渉as confirmed that the flood control projects amounting to P86.9 billion are actual, high-impact projects that provide immediate protection to communities and strengthen our flood resilience nationwide,鈥 the treasury bureau said in the statement.
Graft revelations will eventually help improve how state funds are utilized and spur a 鈥渞eset,鈥 said Ms. Almanza. 鈥淚t will provide a positive signal that there鈥檚 a mechanism in place for the government to address the issue of corruption. Investors will see that the funds we borrow will not go to waste.鈥
The government doesn鈥檛 plan to borrow in advance to fund its 2026 budget requirements and the timing of its next global bond sale will hinge on liquidity and the state鈥檚 needs, she said. 鈥淚f there鈥檚 opportunity and we are ready, we will execute.鈥 Manila raised about $3.3 billion from the sale of dollar and euro bonds in January.
The Marcos administration is seeking a national budget of P6.8 trillion for 2026, up 7.4% from this year. It plans to borrow a total of P2.68 trillion, compared with P2.60 trillion pesos this year, while aiming to narrow its budget deficit to 5.3% of the gross domestic product.
鈥淥n fiscal consolidation, we鈥檙e still committed to it, but it鈥檚 going to be gradual,鈥 Ms. Almanza said. 鈥 Bloomberg
