Last July 31, 2008, the Money Market Association of the Philippinesheld its 2nd General Assembly at the ballroom of the Hotel Intercontinental. As with every MART GA, MART invited a guest speaker, which in this particular occasion was the newly-appointed treasurer of the republic, Sec. Roberto B. Tan. MART and its members looked forward to Sec. Tan’s keynote address, as they were interested on his market insights, particularly now that we are in a high-inflation environment and also after the BTR’s issuance of the very much over-subscribed 10th tranche of RTBs. On this note, here are key points, intently listened to by MART and its members, as discussed by Sec. Tan: 

–         The NG actually had a surplus, as of the first half of 2008, with regard its proposed financing program. The surplus amounted to P23B, and the principal reasons behind these savings were the better than projected tax collections of the BOC and BIR and the lower NG expenditures for the first six months.

–         On the NG’s proposed strategies to cushion the effects of high inflation, Sec. Tan highlighted measures such as the continued privatization efforts, the accessing of foreign funding and the provision of support for price relief on rice and temporary support for the transport sector.

–         On the recently issued 10th tranche of RTBs, which amounted to P70B, Sec. Tan particularly pointed out that the P70B raised was twice than what was originally planned. On this note he mentioned, that borrowings for the remainder of the year would now be limited, as the NG’s cash position has just been beefed up. 

Here are some of the highlights of the open forum that followed: 

–         Asked if there is a risk on the country’s credit rating, now that we are in a high-inflation environment, Sec. Tan said that the only downside risk on our credit rating is that it will remain stable/ unchanged.

–         Sec. Tan mentioned that the current financial program of the NG assumes a balanced budget. If there would be additional cash requirements by the BTr, it would only be to finance a possible budget deficit for the year, if there will be such. On the other hand, Sec. Tan mentioned that it would also be possible that they might frontload some of next year’s cash requirements this year, therefore possibly increasing whatever limited borrowings they have planned for the remainder of 2008.

–         Asked on how the BTr would approach next year’s big maturities, particularly the P134B FXTN 3-13, Sec. Tan mentioned that it would be possible they would issue another tranche of RTBs in order to accommodate the heavy maturity. Sec. Tan also mentioned that their borrowing program for the remainder of the year, despite it being limited when compared to their original plans now that they have raised P70B through the RTBs, would give emphasis on this event.