MANILA - The government spent a total of P549.016 billion in the first 9 months of the year to service its debts, up 2% from the P537.352 billion it spent in the same period last year.

According to the Bureau of Treasury, the increase was in line with the government's efforts to consolidate its debts.

Of the P549.016 billion, the government spent P235.283 billion for interest payments, slightly higher than the P234.706 billion paid out in the same period last year, data from the Treasury showed.

Interest payments made to domestic creditors totaled P132.635 billion, down 6.1% from P141.327 billion last year.

On the other hand, interest payments to foreign creditors rose 9.9% to P102.648 billion from P93.379 billion a year ago.

For principal payments, the government spent a total of P313.733 billion in January to September, or 3.66% higher than the P302.646 billion disbursed in the same months last year.

Principal payments to local lenders amounted to P226.378 billion, lower than last year's P234.332 billion, while payments to foreign lenders rose to P87.361 billion from P68.314 billion.

For the month of September alone, the government shelled out a total of P61.277 billion to service its debts, up by 1.87%t from the P60.149 billion it spent in the same month in 2008.

The government's had programmed P698.5 billion in debt payments this year or an 8.7% increase from last year's actual payout of P612.7 billion.

It borrows mainly to finance the country's budget deficit.

The government projects the deficit to hit P250 billion or 3.2% of gross domestic product this year.