The Philippines' foreign debts is expected to decrease to 68 percent from 72 percent of gross domestic product in 2005 as a result of the fiscal reforms initiated by Arroyo administration, Press Secretary Ignacio Bunye said in a statement from Malacañang yesterday.

Bunye said "If the trend continues, and we are confident it will, then we are well on our way to achieving a balanced budget on or before 2010."

He said the international market has responded favorably to the Arroyo administration's single-minded pursuit of fiscal reforms, and the efforts have reaped dividends for the country, the statement said.

The country's five-year bonds have also rallied, Bunye said, thus pushing yields to the lowest in more than seven years. Since the market expects the government's borrowing requirement to be less as the deficit narrows, there is room for further decline in the yields, the statement added.

"This all means that we can anticipate more savings because we will be paying less for our international obligations. For the first time in many administrations, we will have internally generated money to pay for our basic social services", Bunye added.*

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