Debt payments down to P515B

GOVERNMENT debt payments declined in 2014 as fiscal authorities kept up with efforts to restructure its liabilities to bring down costs, freeing up more resources available for projects on the ground.

Data released by the Bureau of the Treasury showed state debt payments dipped as amortization declined while interest costs held steady.

The cost of servicing government debt last year declined to P515.01 billion in 2014 from P551.02 billion the year before.

The bulk of the government’s debt servicing cost debt to interest payments, reaching P321.18 billion, down slightly from P323.43 billion the year before. A more significant decline was observed in amortization costs, which eased to P193.82 billion last year from 2013’s P235.85 billion.

Last year, interest rates in the country continued to fall after the Philippines got rating upgrades from two of the world’s three major credit rating firms. Philippine sovereign debt is now rated at two notches above junk by both Moody’s Investor Service and Standard & Poor’s.

Credit ratings are indications for the government’s ability to repay its obligations. It also serves as a proxy for the perception over the condition of the economy.

The country’s higher credit scores are a result of the recent improvement in the state’s finances due to better tax collections.

At the end of last year, the government’s outstanding debt rose by 1 percent to P5.73 trillion. The state’s total debt was the equivalent of 45.4 percent of gross domestic product (GDP), better than 2013’s 49.2 percent.

In the last decade, the government’s debt-to-GDP ratio peaked in 2003 at 74.4 percent.

Of the total debt at the end of 2014, P3.82 trillion were domestic liabilities, while the balance was owed to foreigners.

Last year, the government’s budget deficit to P73.1 billion, equivalent to about a fourth of the 2014 program.

The fiscal gap posted last year was 55 percent less than the P164.1 billion posted in 2013, and also smaller by 73 percent than the P266.2-billion deficit programmed for 2014.

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