Wed, Dec 24, 2008 - Page 11 News List

Government to auction bonds and treasury bills

PAY UP The government needs NT$400 billion to cover existing debts and will need NT$176.15 billion to issue consumer vouchers and launch infrastructure projects

By Crystal Hsu  /  STAFF REPORTER

The government plans to auction NT$110 billion (US$3.3 billion) in bonds and NT$60 billion in treasury bills in the first quarter of next year to help finance government spending, the Ministry of Finance said yesterday.

Chen Shueh-hsiang (陳雪香), deputy director of the ministry’s National Treasury Agency, told a media briefing that it would sell between NT$430 billion and NT$440 billion in bonds next year, compared with NT$410 billion in bonds this year.

The government also plans to sell NT$160 billion in treasury bills next year, Chen said.

The Cabinet last month approved a special budget of NT$85.7 billion for consumer vouchers to be issued next month.

The government hopes to stimulate domestic consumption to compensate for slowing exports. The Cabinet has also approved a NT$400 billion infrastructure spending plan for the next four years to boost economic growth.

SCHEDULE

Based on the ministry’s plan, the government will auction NT$40 billion in five-year notes on Jan. 16, NT$30 billion in 20-year bonds on Feb. 11 and another NT$40 billion in 10-year securities on March 2, Chen said.

The government will also sell NT$20 billion in 91-day treasury bills on Jan. 5, NT$20 billion in 182-day bills on Feb. 19 and NT$20 billion in 273-day bills on March 3, Chen said.

By unveiling the auction plans early, the ministry said it hoped to set a benchmark for both bonds and treasury bills and give interested investors time to plan their portfolios.

The plans confirmed the government’s intention to increase borrowing in order to finance various stimulus measures amid the economic downturn.

The government needs NT$400 billion to pay existing debts and another NT$176.15 billion in special funding for the consumer vouchers and to fund flood control measures and other infrastructure projects next year.

The figures do not include the proposed NT$165 billion budget deficit for next fiscal year.

Altogether, the nation’s total debt stands at NT$4.1 trillion, or 31.6 percent of GNP, which is well below the 40-percent ceiling, Chen said.

Part of the borrowing would not have to be realized if the stimulus measures lagged or tax revenues were greater than expected, Chen said.

YESTERDAY’S AUCTION

Meanwhile, the government sold NT$40 billion (US$1.2 billion) in 10-year bonds yesterday at a yield of 1.404 percent.

The yield at the previous sale on Sept. 19 was 2.243 percent.

Yesterday’s auction drew bids equal to 1.97 times the debt on offer, compared with 1.33 times at the last auction, the central bank said in a statement yesterday.

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