(Bloomberg) -- The Philippine government is seeking a 300-billion peso ($5.96 billion) loan from the central bank next year, lower than this year’s budget support as it anticipates the economy to recover, Finance Secretary Carlos Dominguez said.

The government has also informed the Bangko Sentral ng Pilipinas that it will fully repay its outstanding 540-billion peso provisional advances on Dec. 10, ahead of the Jan. 12, 2022 maturity. The new loan will carry no interest, will be due in three months and can be extended by another three months.

The smaller loan signals that “we are on track with the unwinding of liquidity support on firmer evidence of return to economic strength,” the Department of Finance said, citing Dominguez’s letter to central bank Governor Benjamin Diokno.

The finance chief, in a forum on Wednesday, said government borrowings will start to decline in 2022 as revenue is expected to return to 2019 levels. “This administration will make sure to help the next president and the next generations address the fiscal and economic risks brought about by the pandemic,” he said.

Key Insights: 

  • Economic recovery has begun to take root as more businesses embark on a safe reopening as vaccination continues, Dominguez said
  • Even with the threat of new Covid-19 variants, the Philippines’ healthcare system and vaccine stockpile will suffice to contain another surge in infection
  • “We will solidify our recovery by reopening the economy to alert level one, hopefully by January 2022,” he said at the forum
  • Further reopening includes plans to resume face-to-face classes, increase public transport capacity to 100% and relax local and international travel restrictions

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