Reporter

THE Department of Finance (DOF) paid down debts contracted by the national government totaling P351.7 billion in the first six months.

This development was part of a broad effort at bringing down the level of the government’s indebtedness this year to 51.7 percent of local output or the gross domestic product (GDP).

Data obtained from finance officials show that principal payments for the period totaled P210.7 billion.

On the domestic side, the department headed by Finance Secretary Margarito Teves made principal payments on P157.5 billion worth of local debts and P53.2 billion in principal payments on foreign IOUs during the period.

Teves had been making payments on principal worth tens of billions of pesos in the past six months, the largest of which was in February when he settled P95.7 billion.

Interest payments on both foreign and local debt have been substantial, totaling P140.9 billion during the period.

Except in June, when interest payments totaled only P7.9 billion, Teves had also made interest payments in the tens of billions of pesos.

According to DOF data, domestic interest payments totaled P88.7 billion while interest payments on foreign debt totaled P52.2 billion.

Data also show interest payments for the period were 8.75 percent higher than a year ago when they totaled only P129.6 billion.

Principal payments, on the other hand, fell by 5 percent from the comparable period last year to P210.7 billion from P220.8 billion.

Teves earlier committed to reduce the national government’s debt-to-GDP ratio to 51.7 percent of GDP this year from 55.7 percent last year.

He hopes to reduce this further to below 50 percent of GDP by 2010, when the term of President Arroyo ends.

The government’s debt-to-GDP ratio hit a high of 70 percent in 2005, which the country’s monetary authorities are trying to pare down each year as part of a program to attract more foreign investors into the Philippines.

The program is also being pursued in earnest to boost Manila’s credit standing—deemed at present by major credit-rating agencies as below investment grade.

A subpar credit stature makes it comparatively expensive for Manila to obtain credit abroad.

DOF pays P351.7B in national-government debts

THE Department of Finance (DOF) paid down debts contracted by the national government totaling P351.7 billion in the first six months.

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