Higher gov't interest payments due to weak peso
MANILA, Philippines – The weakening of the peso will result in higher interest payments for government this year, but there will be "offsetting factors," said National Treasurer Rosalia de Leon.
Interest payments rise by P2 billion for every unit depreciation of the peso against the US dollar, according to de Leon.
Last week, the peso fell to a 3-year low of 45:$1.
"It (peso depreciation) has an impact on our interest payments, but there will be offsetting factors," she said.
One such factor is the reduction in government borrowings this year.
Budget Secretary Florencio Abad earlier said that the government is looking at borrowing P715 billion from both international and local markets in 2014. This is lower than the P735-billion borrowing program in 2013.
Of the planned borrowings, bulk or P620 billion will come from domestic creditors, while P95.03 billion will be sourced overseas.
"We also retired (or prepaid) some debts in the past, so [this] will ease the amount of maturing obligations," de Leon said.
Bureau of the Treasury data showed the government spent P526.98 billion to pay maturing obligations in January to November 2013, down 20% from the previous year's level.
The decline was due to lower principal payments – P230.29 billion, down by 39%.
On the other hand, interest payments jumped 5% to P296.69 billion. Despite this, the share of interest payments in government expenditures continued to go down.
"January to November 2013 payments narrowed down to 17.7% of the government’s total disbursements, versus 18.4% in the same period in 2012," the Finance department said. – Rappler.com