Gov’t posted P105.5B in interest savings in January-November

The government has posted P105.5 billion in interest savings on loans in the 11 months ending November last year, helping boost fund disbursements, according to the budget department.

Budget Secretary Florencio B. Abad said in a statement that the savings came from decreased borrowings and the strengthening of the peso.

Abad said the government registered lower debt volume and decrease in the issuances of treasury bonds during the 11-month period.

According to the Bureau of the Treasury, the government paid in January to November a total of P251.6 billion in interest, consisting of P150.6 billion on domestic debts and P100.9 billion on foreign borrowings.

Total interest payment for the period was 9 percent lower than the P275 billion recorded in the same period of 2010.

Abad said savings on interest payments, combined with additional dividends from government-owned and–controlled corporations, helped ramp up disbursements beyond targets in 2011.

Data from the Department of Budget and Management (DBM) showed that the state purser last year released P766.1 billion to government agencies and departments, exceeding by P6.2 billion the programmed budget of P759.9 billion.

“Since the Aquino administration set the Disbursement Acceleration Plan in motion, we have seen a significant increase in releases for various departments and government agencies,” Abad said.

In December, Abad said the decrease in interest payments was a result of the liability management strategy that the Department of Finance had been implementing and the substantially lower deficit to date.

As of end-November 2011, the government has spent P96.2 billion on top of the national budget, which was barely a third of the programmed P300-billion deficit for 2011.

Abad added that the lower borrowing costs due to the strengthening of the peso and lower interest rates supported the strategy managing debts.

The budget chief said the peso stood at an average of 43.30 against the US dollar in January to November, stronger than the 45.20 a year ago.

He added that, correspondingly, the 364-day treasury bill cost the government an average of 2.5 percent from 4.4 percent previously.