Gov’t interest expenses declined in October | Inquirer Business

Gov’t interest expenses declined in October

IMPROVEMENT Latest data from the Bureau of the Treasury(BTr) releaved a slightly lower interest burden. —PHOTO FROMBTR

IMPROVEMENT Latest data from the Bureau of the Treasury (BTr) releaved a slightly lower interest burden. —PHOTO FROM BTR

MANILA  -Interest burden, as a share of government revenues, eased in October, although it stayed above the 15-percent mark that a debt watcher said must not be breached on a sustained basis to avoid any downward pressures on the country’s creditworthiness.

Latest data from the Bureau of the Treasury showed interest payments ate up 15.3 percent of state revenues in October, down from 28.0 percent in September.

Article continues after this advertisement

So far this year, interest costs, as a share of revenues, stood at 16.21 percent, higher than 14.7 percent a year ago.

FEATURED STORIES

Analysts have said the Marcos administration could face more expensive borrowings amid rising interest rates following the aggressive tightening actions of the Bangko Sentral ng Pilipinas (BSP) to fight resurgent inflation.

That could create a problem for a government that has to plug a projected budget deficit of P1.5 trillion this year, which is equivalent to 6.1 percent of gross domestic product. But more importantly, rising interest rates risk diverting government funds from more productive spending to settling borrowing costs.

Article continues after this advertisement

Last week, S&P Global Ratings affirmed the country’s triple-B plus investment grade credit rating while keeping a “stable” outlook, meaning changes in the rating are unlikely in the next 18 to 24 months.

Article continues after this advertisement

But S&P cautioned the government from letting debts, as a share of the economy, exceed the 60 percent threshold deemed manageable for emerging economies like the Philippines.

Article continues after this advertisement

The debt watcher also said interest payments exceeding 15 percent of revenues on a sustained basis would be an indication of downward pressure on the country’s creditworthiness.

S&P said it may ultimately downgrade the Philippines’ credit rating if “economic recovery falters, leading to a significant erosion of the country’s long-term trend growth or an associated deterioration of the government’s fiscal and debt positions.”

Article continues after this advertisement

However, an upgrade may happen if the economy “recovers much faster than we expect, and the government achieves more rapid fiscal consolidation.”

Your subscription could not be saved. Please try again.
Your subscription has been successful.

Subscribe to our daily newsletter

By providing an email address. I agree to the Terms of Use and acknowledge that I have read the Privacy Policy.

TAGS: expenses, revenues

Your subscription could not be saved. Please try again.
Your subscription has been successful.

Subscribe to our newsletter!

By providing an email address. I agree to the Terms of Use and acknowledge that I have read the Privacy Policy.

© Copyright 1997-2024 INQUIRER.net | All Rights Reserved

This is an information message

We use cookies to enhance your experience. By continuing, you agree to our use of cookies. Learn more here.