Finance Secretary Benjamin Diokno said Thursday that allocations for debt burden will account for just a tenth of the proposed 2023 national budget, and not a third of the total.
“Only 11.6 percent or P611.0 billion of the P5.268 trillion proposed 2023 national budget is allocated for debt burden. The amount includes P582.3 billion for interest payments and P28.7 billion for net lending,” Diokno said in a statement.
“This is much lower than the P1.6-trillion debt service—equivalent to 29.8 percent of the proposed budget,” Diokno said to correct reports that included the principal amortization of P1.020 trillion as part of expenditures.
Diokno said the principal amortization of debt is not included as an expense item under any accounting standard, whether in the private or public sector.
He said the principal amortization would not contribute to additional debt, Debt obligation is only transferred from an old creditor to a new creditor in the process of refinancing, he said.
Diokno said the proper measure of the debt burden component of the budget includes interest payments and net lending as reflected in the Department of Budget and Management’s People’s Budget primer.
He said that while the share of debt burden in the 2023 national budget would be 0.8 percentage points higher than this year’s 10.8 percent, it would still be lower than 2021’s 12.4 percent.
Diokno earlier assured senators that the national debt remained within manageable levels. He said most of the national debt is long term, spread out and set at the lowest possible rate.
Data showed that as of end-June, the national government debt reached P12.79 trillion, equivalent to 62.1 percent of GDP.
The government, under the Medium-Term Fiscal Framework, aims to bring down the debt-to-GDP ratio to less than 60 percent by 2025 and cut the deficit-to-GDP ratio from 6.5 percent to 3.0 percent by 2028.
Diokno said that the structural reforms and enhanced tax system instituted by the Duterte administration would ensure that the government would meet its obligations.
The MTFF also proposes measures to further improve tax administration and enhance the fairness and efficiency of the tax system.
Diokno expressed confidence government revenues would continue to pick up and the deficit would decrease on the back of a strong economy, as demonstrated by a broad-based 7.4 percent gross domestic product growth rate in the second quarter.
The MTFF targets an economic expansion of 6.5 percent to 7.5 percent in 2022. Economic analysts consider this goal to be the highest among the ASEAN+3 countries.
