Thursday, November 22, 2012

Sin Tax Law Passed

Prices of local government securities rose today following the Senate’s approval of a bill to increase sin and excise taxes. Officials stated that this would substantially increase revenues and boost the country’s chances of achieving investment grade status.

In general, yields declined by an average of 3.55 basis points led by the belly and long end of the curve which lost 5.5 and 4.7 basis points, respectively.

The Philippine peso climbed as the passage of the sin and excise tax bill increased the country’s chances of reaching investment grade status. The local currency gained 2.5 centavos to close at 41.145.

For 2013, the government is looking to borrow as much as US$3.2 billion from foreign sources. The proceeds will be used to help fund development projects and programs, as well as to settle maturing dollar-denominated debts.

According to National Treasurer Rosalia de Leon, this amount is slightly higher than the estimated US$3 billion that the government would have borrowed for 2012.

She added that around US$1.5 billion to US$2 billion of the money to be borrowed next year would be secured through the sale of government bonds in the international market.