Gov’t to reduce debt service in 2012

MALACAÑANG WANTS to reduce debt payments to P367 billion in 2012, or 1.3 percent lower than the planned P372 billion this year, to sustain efforts in consolidating its finances, mainly by lengthening the average maturity of obligations.

Budget Secretary Florencio B. Abad said that compared to the total national budget, debt servicing funds will decrease to 20.2 percent based on the Malacañang’s proposed allocations for 2012 from 22.6 percent of the 2011 budget.

President Aquino has approved a proposal for a P1.816 trillion budget next year, which is 10.4 percent more than this year’s P1.645 trillion.

The proposal will be submitted to Congress on July 26, the day after the President delivers his State of the Nation Address.

“The 2012 budget is the first budget that will be fully-prepared, legislated and executed under the Aquino administration so we want to really ensure that the Aquino brand of governance is fully reflected in [it],” Abad said.

In a related development, the Bureau of the Treasury said it plans to issue P117 billion worth of Treasury bills and bonds in the third quarter, which is the same level as in the previous quarter.

Lined up for auctions in the July-September quarter are P54 billion in T-bills and P63 billion in T-bonds.

In a notice to dealers of government securities, National Treasurer Roberto B. Tan said the BTr is scheduled to offer in six fortnightly auctions a total of P12 billion in 91-day T-bills, P18 billion in 182-day bills and P24 billion in 364-day bills.

Further, the BTr is set to offer a batch of four-year bonds, two batches of seven-year bonds and two batches of 10-year bonds, each worth P9 billion.

Also up for auction are a batch of 20-year bonds and another of 25-year bonds.

Based on the domestic borrowing plan for the third quarter, the amount of debt papers that may be issued in the next three months will rise by about 8.8 percent compared to the P107.5 billion planned for the year-ago period.