Interest payments on gov’t debt seen rising in ’14
The government will spend more on interest payments in 2014 as it continues to rely on borrowings to partly fund its expenditure requirements.
In the national budget for next year that President Aquino signed last week, the government earmarked P352.65 billion to pay interests on its outstanding obligations, up year-on-year by 5.6 percent.
Despite the increase in interest payments, the Department of Budget and Management said the share of this expenditure item in the total budget declined.
With the national budget for next year set at P2.265 trillion, interest payments would account for 15.6 percent.
For this year, interest payments were estimated to account for 16.6 percent of the P2.006-trillion national budget.
“The share of debt servicing will continue to go down,” Budget Secretary Florencio Abad told reporters earlier.
The increase in the state’s expenditure program for next year would lead to a higher amount of budget deficit.
The government has set a budget deficit ceiling of P266.2 billion for next year, up by nearly 12 percent from the targeted ceiling for this year.
With the economy expected to post another robust growth rate next year, the ratio of the government’s budget deficit to the country’s gross domestic product (GDP) is estimated to stay at 2 percent.
Officials said a deficit-to-GDP ratio of 2 percent or lower was manageable and would help sustain the downtrend of the government’s debt burden.
The government’s debt burden, or the ratio of outstanding debts to GDP, is seen to decline anew to 49.3 percent this year and further to about 47 percent next year.
It peaked at over 70 percent in 2004 before declining continually to 51.5 percent last year.
In the meantime, the Bureau of the Treasury, which is tasked to implement the government’s borrowing program, earlier expressed confidence that interest rates on government securities would remain benign next year.
National Treasurer Rosalia de Leon said the country’s favorable credit standing should help keep interest rates on Philippine government securities modest in 2014 despite the much-feared market volatility to be brought about by the anticipated withdrawal of the stimulus program of the US Federal Reserve.
