THE Philippine government will spend P2.17 billion a day next year for interest and principal payments of its debts alone, according to Senate President pro-tempore Ralph Recto.
But while the debt service will climb to P791.5 billion next year, the government allotment on interest payments in the national budget continues to shrink, Recto said.
As of last April, national government outstanding debt was P5.309 trillion, an amount representing 48.9 percent of the gross domestic product (GDP).
Recto said the country’s debt-to-GDP ratio is better than its Southeast Asian neighbors and even developed countries like the United States.
He noted that interest payments for 2014 have 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 10 years ago when interest payments were eating up 35 percent of the national budget,” Recto said.
The administration of President Benigno Aquino 3rd, according to Recto, has been trimming the share of interest payments since 2010.
Of the P352.7 billion earmarked for interest payments for 2014, P248.4 billion will be for domestic liabilities and P104.3 billion for foreign debt.
Next year’s P20.5-billion interest payments expense is 6.2 percent bigger than the P332.2 billion allocated this year.
Recto said only interest payments are included in the national budget. Principal amortization—the amount for the retirement of debts—is treated as an off-budget item and not included in the General Appropriations Act (GAA).
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 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 to P43 per $1.
Recto noted that the country’s 48.9 percent debt-to-GDP ratio is better than the US’ 114 percent and Greece’s 200 ratio.