The national government will service more debts in 2009 than this year as plans to beef up infrastructure spending for the remainder of 2008 will build up its outstanding obligations.

According to the government’s 2009 fiscal program, approved by the inter-agency Development Budget Coordination Committee, P681.52 billion will be spent for debt servicing next year, seven percent more than the P636.08 billion programmed for this year.

About P378.87 billion will go to settling principal liabilities and P302.65 billion to pay interest.

Only interest payments are automatically appropriated in the national government’s annual budget. Principal loans are usually paid with borrowed money.

Of the debts to be paid, P200.38 billion is foreign and P481.14 billion is local.

Officials said the government needed to increase spending to counter the effects of adverse economic conditions. “The need to provide social protection takes precedence over the satisfaction of turning in a balanced budget scorecard,” Budget Secretary Rolando Andaya Jr. said.

High inflation, which forced households to tighten consumption of non-essentials, and a decelerating global economy are blamed for the drop in the gross domestic product (GDP) growth to 4.6 percent in the first half of the year from 7.6 percent in the same period in 2007.

GDP growth for the full year is projected at 5.5-6.4 percent, compared with 7.2 percent last year, the highest in three decades. Edited by INQUIRER.net