Gov’t sees drop in debt-servicing need

The government expects a slight decrease in its debt servicing requirement next year amid debt-consolidation efforts and falling principal payments, according to Budget Secretary Florencio B. Abad.

Abad said that based on the proposed national budget for 2013, the government would spend P333.9 billion to pay its debts, lower by P800 million than the P333.1 billion earmarked this year.

However, he said the decrease would be more significant if the payment kitty was compared to the full-year budget.

“Due to prudent and efficient public financial management, the share of debt servicing in the budget will decrease to 16.6 percent in 2013, from 18.3 percent in 2012,” he said.

Malacañang is proposing a budget of P2.006 trillion for 2013, higher by 10.5 percent than the P1.816 trillion that Congress approved for this year.

“With decreasing interest payment costs and improving revenue effort, the deficit in 2013 is expected to decrease to 2 percent of gross domestic product, or P241 billion, from 2.6 percent of GDP, or P279.1 billion, in 2012,” Abad said.

In 2011 the government paid P279 billion in interest, covering P170.5 billion on domestic debts and P108.5 billion on foreign borrowings. Total interest payment for 2011 was 5 percent lower than the P294.2 billion recorded in 2010.

Also last year, the government settled P443.8 billion in principal obligations, including P300.6 billion in domestic debts and P143.2 billion in foreign loans. Total principal payment in 2011 was 12 percent higher than the P395.6 billion posted in 2010.