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THE national government’s debt servicing hardly
changed in the first semester of the year, according to the Bureau
of Treasury.
Data from the bureau showed that
debt-service payments inched up by 0.3 percent to P351.7 billion at
end-June from P350.5 billion in the same six-month period last year
due to a weaker local currency.
Debt servicing refers to payments
of both interest and principal. The debt service burden excludes
actual outflows such as rescheduling or refinancing of existing debt
and conversion of debt to equity. The burden however includes the
prepayments.
The bulk of the debt service
consisted of the principal amount at P210.7 billion, or 4 percent
lower than a year ago. Interest payments stood at P141 billion,
growing 9 percent year-on-year.
In June alone, the government’s
debt servicing reached P20.2 billion from P23 billion last year. It
programmed its debt servicing this year to reach P624.1 billion,
equivalent to 8.6 percent of the country’s economy, as measured by
its gross domestic product (GDP). This is P11.3 billion higher than
last year’s P612.8-billion program.
The Department of Finance expects
the country’s debt to GDP ratio to fall to a manageable level in
the next two years due to the economy’s faster growth pace and the
government’s fiscal discipline.
The debt to GDP ratio measures a
government’s ability to service its obligations. It is a closely
monitored indicator of fiscal health.
Last year, the debt-to-GDP ratio
stood at 55.8 percent from 63.8 percent in the previous year. The
ratio is expected to fall further to 52.4 percent this year, and to
below 50 percent by 2010.
The finance department earlier
said the country was on its way to bringing down its debt below 50
percent of the economy, as improving tax collection has allowed it
to depend less on borrowings.
Data from the bureau showed that
in the first four months of the year obligations stood at P3.871
trillion, or 0.7 percent lower than the P3.900 trillion outstanding
in the same period last year.
The end-April debt level was P7.7
billion lower than the P3.881 trillion outstanding in the first
three months of this year.
--Chino S. Leyco
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