The Department of Finance (DOF) said 12.1 percent, equivalent to P699.2 billion, of the proposed P5.768 trillion 2024 budget is allocated to finance the debt burden, including net lending.
“When assessing the debt burden component of the budget, it is crucial to solely consider interest payments and net lending,” DOF Secretary Benjamin Diokno said in a statement.
The DOF said interest payments have been declining, freeing up fiscal resources which can be reallocated to support the government’s priority programs.
Data showed that from 1986 to 2015, the average share of interest payments to the total national government expenditures was at 23.3 percent. This further declined to an average of 10.1 percent from 2016 to 2022.
“For 2024, the allocation for interest payments is only 11.6 percent or P670.5 billion of the 2024 budget. This allows us to spend more on socioeconomic programs and projects in our priority sectors such as education and infrastructure,” Diokno said.
The DOF also maintained that under any accounting standard, the principal amortization of debt is not included in the expense item since it is not classified as expenditure, hence it is not automatically appropriated.
“The settlement of debt obligations incurred from expenses were already recorded in the past. Therefore, principal amortization only represents the fulfillment of financial responsibilities arising from previously recorded expenses,” Diokno said.
Since principal payments are merely settlements of liabilities incurred in the utilization of appropriations programmed in prior years, recording it again as expenditures would result in double counting of appropriations, he added.
The economic team said it remains committed to implementing the Medium-Term Fiscal Framework, which serves as the government’s blueprint, to bringing down the country’s debt-to-gross domestic product (GDP) ratio from 60.9 percent in 2022 and to less than 60 percent by 2025, cutting the deficit-to-GDP ratio to three percent by 2028, and maintaining infrastructure spending at five to six percent of GDP.
As of March 2023, the national government’s debt-to-GDP ratio was recorded at 61 percent, which is below the 63.5 percent ratio in the first quarter of 2022.
