MANILA, Philippines - The National Government’s debt is projected to climb to P4.698 trillion in 2010 from the programmed P4.489 trillion this year, documents from the Department of Finance (DOF) showed.
Of the amount, the government’s domestic debt is projected to increase to P2.752 trillion next year from the programmed P2.593 trillion this year.
On the other hand, the government is expected to borrow P1.946 trillion from foreign creditors next year or higher than the projected P1.896 trillion for 2009, data from the DOF also showed.
Finance officials attribute the increase in the National Government’s debt to an increase in maturing obligations next year.
As a percentage of gross domestic product (GDP), the P4.698 trillion is equivalent to 56.3 percent, an improvement from the projected debt-to-GDP ratio of 57.6 percent for this year.
For 2010, the economy, as measured by the GDP, is projected to expand by 2.6 percent, an improvement from the 0.8 to 1.8-percent economic growth range assumption for this year.
As of end-March, the National Government’s debt increased by 1.5 percent or P65 billion to P4.229 trillion from the end-February level of P4.164 trillion, latest data from the Bureau of the Treasury showed.
Of the P4.229-trillion total outstanding debt, the government owed P1.842 trillion to foreign creditors, accounting for 44 percent of the debt and P2.387 trillion or 56 percent to domestic creditors.
The DOF said because of the country’s high debt level, the government needs new sources of revenues.
These include measures to raise “sin” taxes, rationalize tax incentives and to simplify the country’s net income taxation system.
The government wants to change the current excise tax system on cigarettes and alcohol or the so-called sin products by adopting a single rate structure for each category of alcohol such as distilled spirits, wine and fermented liquor and for each category of tobacco products such as tobacco, cigar and cigarettes.
According to government estimates, the sin tax measure could raise as much as P19-P20 billion in the first year of implementation, P30-P40 billion in the second year, P40-P50 billion in the third year and P60-P70 billion in the fourth year.
The DOF said the current tax structure is inequitable because products having the same current net retail price can be taxed differently if one was introduced before January 1997 and other one after 1997.
The government, meanwhile, expects to raise P10 billion a year from the measure seeking to rationalize fiscal incentives and another P6 billion a year from the measure seeking to simplify the country’s net income taxation scheme.