Principal debt payment not part of budget—Treasury

The Bureau of the Treasury clarified that the principal debt payment earmarked by the Department of Budget and Management (DBM) next year is not part of President Marcos’ proposed national budget.

National Treasurer Rosalia V. De Leon said on Tuesday, Aug. 23, that budget for principal payment, amounting to P1.2 trillion, is on top of the P5.268-trillion National Expenditure Program (NEP).

“Principal is not part of the budget, only interest payment is,” de Leon explained.

In a separate statement, Budget Secretary Amenah F. Pangandaman said the 2023 NEP only allocated 11 percent, or P582 billion, for interest payments.

“The much bigger remaining part of the budget, which is almost 90 percent, are available for the delivery of public services, programs and projects, which comprises economic and social expenditures, personnel services and general public services,” Pangandaman said.

Meanwhile, the budget chief assured that the debt servicing of P1.6 trillion would not hamper the implementation of the government’s priority programs and projects.

Pangandaman added that the projected P14.63 trillion debt by end of next year is also “well managed.”

“Debt-servicing is expected to stabilize and decline over the near term, consistent with the Marcos Jr. administration’s fiscal consolidation plan of reducing national government debt-to-GDP ratio of 51.1 percent,” Pangandaman said.

This plan is anchored on its medium-term fiscal framework (MTTF), she added.

“The projected decline in debt-to-GDP ratio will continue to be supported by a growing economy, which in turn is stimulated by the government’s annual budget for its economic transformation for inclusive and sustainable prosperity,” the DBM chief said.

“Lastly, allow us to note that debt incurred in recent years have been put into good use, such as on productive investments in infrastructure and human capital, as well as in recovery and health programs amid the pandemic,” Pangandaman said.

“Debts incurred for the realization of projects are not plain and simple government expenses. They are investments that are made for the purpose of realizing a minimum required economic return,” she concluded.