THE GOVERNMENT is still planning to source additional borrowings from the domestic market to fund the ballooning budget deficit.

“We’re still finalizing the details of our borrowing program, but we’re still targeting the 80-20 [local to foreign] funding split,” National Treasurer Sharon P. Almanza said in a Viber message.

The government is looking to hike its borrowing program to P2.6 trillion this year from P2.55 trillion previously, to fund the ballooning budget deficit.

The Development Budget Coordination Committee (DBCC) last week raised the budget deficit ceiling for 2025 to P1.561 trillion or 5.5% of gross domestic product (GDP) from 5.3% previously.

The DBCC had lowered this year’s revenue collection target to P4.52 trillion from P4.64 trillion previously. It trimmed the expenditure program for this year to P6.08 trillion from P6.18 trillion previously.

Asked where the government will source the additional borrowing requirements for this year, Finance Secretary Ralph G. Recto said in a text message: “Domestically.”

Gross borrowings by the National Government fell by 6.67% to P1.33 trillion in the first five months of the year as both domestic and external borrowings declined.

External borrowings slumped by 21.54% to P305.94 billion during the period, while domestic borrowings fell by 12.74% to P1.02 trillion.

Reyes Tacandong & Co. Senior Adviser Jonathan L. Ravelas said the move to raise this year’s borrowing plan reflects the government’s need to fund its wider budget deficit.

“There’s definitely room for large issuances, especially retail Treasury bonds, which have historically been effective in tapping domestic liquidity and broadening investor participation. However, market volatility — driven by global uncertainties and shifting interest rate expectations — could affect pricing and demand,” Mr. Ravelas said.

A trader said in a text message that yields for the coming auctions of government securities are not expected to drop drastically as the increase in the government’s borrowing program is expected.

The trader added the government will have to issue a large volume, possibly through retail bonds, to meet the higher borrowing target.

“There is still space for large retail bond offerings, especially with strong demand from local investors seeking safe returns in a moderating interest rate environment,” Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera likewise said in a Viber message.

Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message that there was still space for large retail issuances amid “ample” liquidity, but market volatility could push yields higher.

Mr. Rivera also said market volatility stemming from global rate uncertainty, geopolitical tensions, and inflation risks could affect pricing and dampen investor appetite.

“The BTr (Bureau of the Treasury)will need to be strategic with timing, tenor, and incentives to manage costs and ensure successful take-up,” he said.

Mr. Rivera added the BTr could still tap into the foreign bond market as a “mix of strategies” could be used to meet the borrowing requirement.

BTr’s Ms. Almanza previously said the government is unlikely to issue another global bond this year as its foreign borrowing program is almost completed.

In January, the government raised $3.29 billion from its sale of US dollar and euro bonds.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that “large” maturing Treasury bonds from August 2025-September 2025 will also drive the government to increase borrowings.

The government is looking to raise P690 billion from the domestic market in the third quarter or P325 billion via Treasury bills and P365 billion through Treasury bonds. — Aaron Michael C. Sy