Philippines to settle more in interest on debt, less in principal next year

THE GOVERNMENT is allotting P763.25 billion to service its debts next year, data from the Budget department showed, lower than the amount earmarked this year.

The amount set for next year is 6.82% less than the P819.19 billion programmed for this year. It includes P593.15 billion for domestic liabilities and P170.1 billion for foreign debt.

Interest payments are programmed to reach P372.86 billion, up 5.73% from the P352.65 billion earmarked for this year. Broken down, the amount includes P95.3 billion to pay off interest on the country’s foreign debts, while the remaining P277.57 billion will be used for domestic liabilities.

Principal payments, on the other hand, are programmed at P390.39 billion, down 12.58% from the P466.542 billion set for 2014.

It includes P315.59 billion for domestic payments and P74.80 billion for foreign debt.

A significant portion of the national budget is earmarked for interest payments on debt. Principal payments, on the other hand, are off-budget items covered by debt refinancing.

Last year, debt payments fell by over a fifth to P559.017 billion from P729.774 billion in 2012, well below the P767.394-billion debt service program for 2013.

As of June, the country’s debt payments totaled P227.508 billion.

This is just 27.77% of this year’s P819.19-billion program.

The national government’s outstanding debt grew by 3.7% to P5.65 trillion at end-June from the P5.45 trillion recorded as of the same month a year ago as its domestic liabilities increased, data from the Bureau of the Treasury showed.

TAX CODE REVIEW BACKED
Meanwhile, a lawmaker has backed the proposal of the Department of Finance (DoF) to conduct a review of the country’s tax code.

Rep. Romero S. Quimbo (Marikina, 2nd district), chairman of the House Committee on Ways and Means, said a review of Republic Act No. 8424 or the National Internal Revenue Code (NIRC) of 1997 is actually “long overdue.” “We’ve been telling them to do so some time ago,” he said

Bills proposing amendments to the Tax Code are pending at the House of Representatives, with several measures seeking to grant additional exemptions for individual taxpayers by raising income ceilings and increasing the provision for qualified dependents.

Last week, DoF Secretary Cesar V. Purisima called for a “holistic” approach to reviewing the NIRC and not to focus on adjusting income tax rates alone.

Mr. Quimbo said such bills are already being tackled at the House of Representatives. --M.F.E. Flores and M.L.T. Lopez

source:  Businessworld