MELBOURNE - The Philippines will sell its stake in Petron Corp. by December and borrow $750 million to help cover P75 billion ($1.7 billion) in extra spending, Finance Secretary Margarito Teves said.

Teves said the timing of the debt offer would depend on market conditions.

"Within the quarter we should know," Teves told Reuters in an interview.

"The approval has been made already. So our treasurer and the deputy governor will decide exactly when, depending on market circumstances and market conditions," said Teves, who was in Melbourne to attend an Asia-Pacific Economic Cooperation finance ministers' meeting.

Teves said the size of the issue would depend on how much the government was able to raise through taxes and privatizations.

"It could be anywhere from $500 million to $750 million, or even less, depending on whether we are able to generate more from internal sources," Teves said.

He said the government planned to sell its 40 percent stake in oil refiner Petron through an auction by the end of this year to boost budget revenues.

Manila had initially aimed for a balanced budget this year, but later said it could run up a deficit of up to P75 billion because of extra spending needed to prop up the slowing economy and costs of fuel subsidies for the poor.

JG Summit Petrochemical Corp., owned by the Gokongweis, a local business family, has offered P6.55 per share, or about $575 million, for the government's stake.

"That's an offer. Eventually it'll have to be tested by the auction process," Teves said.

"I'm hoping that there will be more than three bidders. If we can have about five that would be even better."

Ashmore Group which currently owns almost 50 percent of Petron is still interested in buying the government stake.

Petron shares last traded at P6.20, compared with the P6.53 a share Petron's majority owner, Ashmore, paid last month to increase its stake in Petron after buying Saudi Aramco's 40 percent stake for $550 million.

Besides the Gokongweis and Ashmore, another potential bidder for the government's Petron stake might be Thailand's PTT PCL, which approached state-owned Philippine National Oil Co. (PNOC) through Morgan Stanley to buy the stake earlier this year.

Teves declined to give a forecast for second-quarter annual economic growth, but said others have said it would be between 5.2 and 5.7 percent. Second-quarter gross domestic product data is due to be released on Aug. 28.

"For 2008, we're still looking at the low end of the target, which is 5.7 percent," Teves said.