Philippines seeks 8 pct rise in 2010 spending

* Manila wants 8 pct hike in 2010 government spending

* Government aims to balance the budget by 2013

* Proposed budget supports 2010 GDP goal of 2.6-3.6 pct

* Sovereign bond prices weaken on fears of more borrowing

MANILA, Aug 14 - The Philippines will ask Congress to approve an 8 percent increase in government spending next year, larger than a 5 percent rise studied earlier, to fund more infrastructure projects, a senior official said on Friday.

Budget Secretary Rolando Andaya said the increase in the proposed budget, totalling 1.54 trillion pesos ($32 billion), was smaller than the near 15 percent hike in 2009, reflecting the government's effort to rein in the fiscal shortfall.

The spending plan assumes a budget deficit of 233.4 billion pesos or 2.8 percent of GDP, at the high end of earlier indications. It will be submitted to Congress later this month.

"We are trying to bring ourselves back on track to having a balanced budget," Andaya told Reuters. "We also want to avoid handing over to the next administration an unsustainable spending."

The government abandoned its goal of balancing the budget last year so it could spend more on infrastructure and social services to help shield the economy from the global downturn. Its budget deficit is set to hit a record 250 billion pesos, or 3.2 percent of GDP, this year.

It now aims to wipe out the fiscal gap by 2013.

"We are on our way to (economic) recovery, although there is still a slight increase in infrastructure spending, we also expect the private sector to pitch in," Andaya said.

Andaya said the proposed 2010 spending plan assumed the economy would expand by 2.6-3.6 percent, faster than this year's growth target of 0.8-1.8 percent.

The economy expanded 0.4 percent in the first quarter of the year from a year earlier, the weakest since 1998.

Rosalia de Leon, head of the Finance department's international finance group, said on Thursday the government has yet to finalise its borrowing plan next year but its foreign debt may rise from the initial plan of around $1.5 billion. [ID:nSP434977]

Philippine sovereign bond prices dipped on Friday in reaction to the comments. [ID:HKG158795]

Finance officials said last month the government is studying possibly prefunding part of next year's overseas borrowing needs ahead of general elections in May.