Gov’t to spend P2.17 billion a day in 2014 for debt service

MANILA-Government’s interest and principal payments on its debts will reach P791.5 billion next year, or a daily disbursement rate of P2.17 billion, Senate President Pro Tempore Ralph Recto said.

While debt service will climb to an all-time high next year, “the good news is that share of interest payments in the national budget has been falling sharply,” Recto said.

Recto added that the debt-to-GDP ratio, which is a better barometer of a country’s indebtedness, is also improving, with the country’s numbers better than its Southeast Asian neighbors and even developed countries like the United States.

Recto said that interest payments for 2014 has been programmed at P352.7 billion, or 15.6 percent of the proposed P2.268 trillion budget. 

“This is a very impressive markdown compared to what we were coughing up ten years ago when interest payments were eating up 35 percent of the national budget,” Recto said.

“Gone are the days when one-third of the budget was remitted to our creditors,” Recto said.

In 2010, on the first year of the Aquino administration alone, share of interest payments was already pared down to 19.1 percent of the national budget.

Of the 352.7 billion earmarked for interest payments for 2014, P248.4 billion will be for domestic liabilities while P104.3 billion will be for foreign debt.

Next year’s interest payments expense is P20.5 billion or 6.2 percent bigger than the P332.2 billion allocated this year. 

Recto explained that only interest payments are included in the national budget. Principal amortization – or the amount for the retirement of debts – is treated as an off-budget item and is not included in the General Appropriations Act.

For principal amortization, the amount allotted for next year is P438.8 billion, with domestic obligations cornering P350.9 billion.

Principal payments on foreign debt, on the other hand, will range from P85.8 billion to P89.9 billion, depending on the US dollar-Philippine peso exchange rate which for 2014 budgeting purposes was pegged at P41-43 per US$1.

As of April 2013, national government outstanding debt stood at P5.309 trillion, an amount representing 48.9 percent of the GDP.

In contrast, the United States and Greece have a debt-to-GDP ratio of 114 percent and 200 percent respectively.