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Govt to spend P19-B more for debts as deficit widens

abs-cbnNEWS.com | 11/17/2008 11:06 PM

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The national government is setting aside P19 billion more from its 2009 budget to service the country's debts as the local economy's growth slows amidst a more challenging global environment.

According to the finance department, the government would have to spend P700.6 billion for its debt payments in 2009 instead of originally planned P681.5 billion.
 
Compared to this year's debt payment of P636.1 billion, the 2009 allocation for both its maturing foreign and domestic obligations, including interest, is P64.5 billion higher.
 
Of the increased P19 billion additional allocation, the P5.9 billion will be added to the principal payments and P13.2 billion to paid for the interest portion, which has ballooned due to higher interest rates. The share of interest payments from the national budget has steadily declined to 22.3 percent this year from 23.2 percent in 2007, and 31.6 percent in 2006.
 
The government sees its budget shortfall widening next year as the global economic slowdown is likely to take its toll on the country’s economic expansion resulting to lower revenues and higher expenditures.
 
The Philippines expects to book a deficit of P102 billion or 1.2 percent of gross domestic product next year from about P75 billion or one percent of GDP this year. The projected deficit next year is wider than the original projected shortfall of P40 billion or 0.5 percent of GDP.
 
A wider deficit next year translates to more borrowings for the government, which would then need to plug the incremental portion.
 
The wider deficit in 2009 stemmed from the decision of the cabinet-level Development Budget Coordination Committee to scale down its GDP growth projections to a range of 3.7 percent to 4.7 percent instead of the previously projected growth of 6.3 percent to 7 percent.