Interest payments in the first seven months this year eased to P175.7 billion from P189.46 billion in the same period last year due to debt management efforts and a stronger peso, according to Budget Secretary Florencio B. Abad.
“[We saw this improvement] because of government’s improved liability management and better foreign exchange rates,” Abad said Friday in a statement.
The budget chief said the country’s better financing position was also partly due to the four positive credit rating moves accorded by international debt watchers to the Philippines during the past 12 months.
Most recently in June, Fitch Ratings brought the country’s long-term foreign currency debt rating to a notch below investment grade due to “progress on fiscal consolidation against a track record of macro stability, broadly favorable economic prospects and strengthening external finances.”
Abad said these favorable actions meant that credit ratings agencies had acknowledged the Aquino administration’s commitment to honest and effective governance, particularly in making sure that public funds are used efficiently and effectively.
“With these upgrades, we can have better access to more affordable financing at better terms,” he said. “This would allow us to further reduce the burden of interest payments on national coffers and free-up funds for productive projects.”
“The increased confidence in our macroeconomic fundamentals helps us attract more direct investments and business activity,” he added. “Ultimately, these may result in more government revenues and, more importantly, more jobs created.”
Also in June, Finance Secretary Cesar V. Purisima said the government was setting its sights on finally wearing an invest-grade badge by 2013.
“We hope to hit investment grade within the first half of the Aquino administration’s term, by 2013 if not sooner,” Purisima said.