Finance Secretary Benjamin Diokno clarified that the country’s debt burden is only 1/10th and not 1/3rd of next year’s proposed budget of P5.268 trillion.
Citing a report that said the country’s debt burden comprises 1/3 of next year’s budget, Finance Secretary Benjamin Diokno said it is only 1/10th of the budget at 11.6 percent or P611 billion of the proposed P5.268 trillion budget for 2023.
Diokno explained this comprises P582.3 billion for interest payments and P28.7 billion for net lending.
The report, he said, included the principal amortization of P1.02 trillion debt as part of expenditure, which in accounting standards (be it private or public) should not be counted as this is “merely the settlement of debt obligations incurred from expenses already recorded in the past.”
He added that the principal amortization does not contribute to additional debt because debt obligation is only transferred from an old creditor to a new creditor in the process of refinancing.
The proper measure of the debt burden component of the budget includes only interest payments and net lending as reflected in the Department of Budget and Management’s (DBM) People’s Budget primer, Diokno said.
Lower than 2021
While the share of debt burden in the national budget is 0.8 percentage points higher than this year’s 10.8 percent, Diokno pointed out that this remains lower than 2021’s 12.4 percent, Business Mirror reported.
Former President Duterte ended his term with the national government’s debt stock soaring to another record high of P12.79 trillion as of end-June this year, as the country needed to borrow more to fund its fight against Covid-19 pandemic. (Diokno was his budget secretary then).
Next year’s gross borrowings of the national government are seen to hit P2.207 trillion, of which 75 percent or P1.65 trillion will come from local sources while the remaining P553.5 billion will be generated from foreign lenders.
Under the Marcos administration’s Medium-Term Fiscal Framework (MTFF), the government aims to bring down the country’s debt-to-GDP ratio from this year’s estimate of 61.8 percent to 51.1 percent by 2028 and cut the deficit-to-GDP ratio from the current 6.5 percent to 3 percent by 2028.
Tags: #DoF, #Diokno, #debtburden, #2023budget