Senator Ralph Recto. INQUIRER file photo
MANILA, Philippines—The government’s debt service will climb to an all-high time in 2014 with P791.5 billion or a daily disbursement rate of P2.17 billion, Senate Pro Tempore Ralph Recto said on Thursday.
“The good news is that share of interest payments in the national budget has been falling sharply,” Recto said in a statement.
He said the debt-to-GDP ratio, which is a better barometer of a country’s indebtedness, was also improving “with the country’s numbers better than its Southeast Asian neighbors and even developed countries like the United States.”
For 2014, Recto said the interest payments have been programmed at P352.7 billion or 15.6 percent of the proposed P2.268 trillion budget. The allocation for principal amortization, meanwhile, amounted to P438.8 billion.
The senator explained that only interest payments are included in the national budget while the 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.
Of the 352.7 billion earmarked for interest payments, Recto said, P248.4 billion will be for domestic liabilities while P104.3 billion will be for foreign debt.
“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,” he said.
“Gone are the days when one-third of the budget was remitted to our creditors.”
Recto said next year’s interest payments expense is P20.5 billion or 6.2 percent bigger than the P332.2 billion allocated this year.
Meanwhile, of the P438.8 billion allocation for principal amortization, P350.9 billion will go to domestic obligations while payments on foreign debt will range from P85.8 billion to 89.9 billion, depending on the US dollar-Philippine peso exchange rate, which was pegged at P41-43 per US$1 in 2014.
As of April 2013, Recto said the national government outstanding debt stood at P5.309 trillion or 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, the senator added.