Debt servicing declines at end-February

MANILA - Taxpayers' money spent to settle the country's debt fell by more than a tenth in the first two months of the year, the Bureau of Treasury said on Monday.

Data from the bureau showed the national government having spent P174.34 billion at end-February on debt amortization and interest. This is 10.7 percent lower than the P195.14 billion spent in the same two-month period last year.

The drop in the government's overall debt servicing was in spite a 2.7 percent increase in interest payments to P72.26 billion this year from P70.85 billion last year. In contrast, the amount spent on paying down the principal debt dropped 18.2 percent to P101.58 billion this year from P124.29 billion in 2012.

In February alone, debt servicing climbed to P62.616 billion this year from P60.439 billion last year. Of the amount spent for debt servicing, P44.696 billion went to amortization and P17.92 billion to interest.

As of January, the government owed P5.334 trillion, or seven percent more than a year ago's P4.993 trillion.

The government incurs debt whenever its tax revenues fall short of its expenditures, creating what is called a budget deficit.

The Aquino administration earlier said it would limit its borrowings this year to the domestic market so it can tap into the country's excess liquidity and so borrow at lower rates.

Treasury rates have slumped to record lows on account of too much money in the local financial system. Treasury bill rates for example have slumped to below one percent.

source: interaksyon.com

Your share of the national debt: P59,000

MANILA - The Aquino administration added nearly a tenth to the national government's outstanding debt last year.

According to the Bureau of Treasury, the government's debt stock rose 9.8 percent to P5.437 trillion in 2012 from the P4.951 trillion the previous year.

This debt is usually settled by new financing, but ultimately the taxpayer foots the bill. Given a population of 92.34 million, each Filipino then is in hock for P58,880.22.

The increase was brought about largely by a 20.7 percent jump in the government's borrowings from the domestic market. Debt owed to local creditors rose to P3.468 trillion last year from P2.873 trillion in 2011.

Foreign obligations fell 5.3 percent to P1.969 trillion from the previous year's P2.078 trillion.

As a result, 64 percent of the government's debt is owed to local creditors, leaving 36 percent with foreigners.

The debt represents the accumulation of borrowings made through the years, as the government makes up for tax collection shortfalls just so it can push through with programmed expenditures, including infrastructure and other capital outlays, personnel compensation, as well as maintenance and other operating expenses.

The annual revenue shortfall gives rise to the budget deficit, which the government finances through borrowings.

The Department of Finance earlier said the government likely ended 2012 with a budget deficit of P235.3 billion, which is lower than the P279 billion ceiling for the period.

source: interaksyon.com