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91-day T-bill rate falls to 5.017% |
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By Des Ferriols
The Philippine Star 03/14/2006 As finance officials hinted at even better fiscal figures in February, the securities market went back to normal yesterday with the average interest rate on bellwether 91-day Treasury bill (T-bill ) falling to its lowest in almost two months. The yield on the 91-day T-bill declined by 23.3 basis points to settle at 5.017 percent from 5.250 percent on Feb. 20, the last time the government sold the debt. That’s the lowest yield since Jan. 16. The government rejected all bids for the securities on Feb. 27 to keep the yield from rising. The interest rates on the 182-day T-bills declined by 4.1 basis points from 6.114 percent at the last auction to 6.073 percent while the rate on the one-year notes went down 10.3 basis points from 7.186 percent to 7.083 percent. The Bureau of Treasury (BTr) said all tenors were oversubscribed, reflecting renewed market demand. "The market is back to normal," said National Treasurer Omar Cruz. "The oversubscription was overwhelming, between 4.5 times to five times." Cruz said the oversubscription was an indication of the size of liquidity circulating in the financial system in search of investment haven amid declining government requirement for fresh borrowing. "This shows restored confidence and comfort of the market in the overall situation buoyed by positive fiscal position presented earlier," Cruz said. "I think they are also anticipating the February fiscal results which would be announced within the week." Cruz would not give any ballpark figure for the February deficit but said the emerging numbers were consistent with the January figures which indicated the Arroyo administration over-performed its deficit target by at least P5 billion. "There will be follow through in February and this augurs well for the first two months of the year," he said. "The revenue growth momentum of the Bureau of Internal Revenue is 18 percent and the Bureau of Customs is 23 percent for January." Cruz said given this momentum, it would be easy for the Arroyo administration to meet and even surpass its fiscal targets for the whole of 2006. Cruz said earlier that the Arroyo administration could easily cut its budget deficit down to 2.1 percent of gross domestic product (GDP) this year and "very easily" balance the budget by 2008. Cruz told reporters that the budget deficit actually fell to 2.7 percent of the GDP in 2005, bringing the Arroyo administration closer to its 2006 goal of 2.1 percent. At 2.1 percent of GDP, the budget deficit should go down from P146.5 billion to P125 billion. However, Cruz refused to say where the deficit level was likely to end this year. "I wouldn’t pick a number, it’s too early in the year," Cruz said. " I’m just saying that it can happen very easily since we have had two years of successive overperformance." Cruz said that although the Bureau of Customs and the Bureau of Internal Revenue have been missing their collection targets, the year-on-year increase in revenues still provided enough room to outperform the deficit target. |
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