MANILA, Philippines — The government spent P451.9 billion in the seven months to July to pay for its debts, and this amount was less by 0.3 percent than the P453.5 billion paid a year ago, according to the Bureau of the Treasury.
The slight decrease was observed as the country paid less interest payments, helped by favorable results of debt management efforts and the strengthening of the peso.
From January to July, the government settled P267.2 billion in principal—P189.6 billion in domestic debts and P86.6 billion in foreign loans.
The amount was about 4 percent higher than the P266 billion paid a year ago.
Also, the government paid P175.7 billion in interest—P101.9 billion on domestic debts and P73.8 billion on foreign borrowings.
Total interest payment for those seven months was 7 percent less than the P189.5 billion recorded in the same period in 2010.
Last week, Budget Secretary Florencio B. Abad said the country’s better debt servicing situation was also partly due to the four credit rating upgrades accorded by international debt watchers to the Philippines in 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 have acknowledged the Aquino administration’s commitment to honest and effective governance, particularly in ensuring efficient and effective use of public funds.
“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.”
Latest data from the Bureau of the Treasury show that outstanding debts rose to P4.777 trillion as of May, increasing by about P65 billion from the April level mainly due to new loans contracted.