BUREAU OF THE TREASURY

SONA 2016 INPUT

Sector: Public Finance

Status:
Through instituted reforms, the BTr has sought to improve the management of the
countrys cash resources. A major step was the roll out of the Treasury Single Account
which consolidates the National Governments (NG) cash holdings to provide a unified
view over government accounts. The improved oversight strengthens the assessment of
NG cash balances, facilitates effective cash forecasting, prevents unnecessary
borrowings, and allows the investment of excess funds.

On the otherhand, prudent debt management has allowed us to alleviate the debt burden.
BTr continues to optimize its borrowing strategy to lower the cost of borrowing while
building up the resilience of the countrys debt against risks.
Strong demand has allowed the issuance of long-dated securities, lowering
refinancing risks. The average time to maturity of NG debt is at 10.29 years as of May,
reaching the upper bound of the medium-term target of 7-10 years;
This was done without compromising fiscal space as borrowing costs have remained
low and stable amidst strong demand;
The borrowing strategy has also facilitated the local currency redenomination of the
NG debt portfolio to mitigate forex risk. Domestic debt has steadily increased its share
of outstanding NG obligations, accounting for 64.5% of the total as of May.

Lastly, the Bureau has contributed to the development of the domestic capital market by
providing benchmarks for local financing and facilitating investments and trade. Our ability
to issue at the long-end of the domestic yield curve is supportive of the long-term funding
requirements for both public and private development projects.

Targets:
To effectively manage the cash resources of the National Government
Alleviate debt burden as evidenced by improving debt sustainability ratios and
favourable debt metrics;
Facilitate local capital market development through strategic debt issuance to sustain
market liquidity and efficient price discovery.

Issues and Challenges Proposed Interventions

1. Strengthen NG cash management Further consolidation of NG cash
resources and accounts still held outside
the Treasury Single Account
2. Enhance market activity in the local GS Promote market activity and deepen
market liquidity through improved market
infrastructure (i.e. Repo, Market Making,
etc)
3. Improved debt management including Adoption of framework in managing
contingent liabilities from PPPs contingent liabilities including those
emanating from PPPs

Pursue passage of amended BOT law to

include CL fund provisioning