The Bureau of Treasury (BTr), however, reported that the national government debt as of January was 2.3 percent lower than the level recorded over the same period in 2006 when the total was recorded at P3.964 trillion.
National treasurer Omar Cruz said foreign obligations amounting to P1.730 trillion accounted for about 45 percent of the total debt. Domestic debt amounted to P2.141 trillion or 55 percent of the total.
Cruz said the domestic NG debt declined by P12 billion from the recorded end-December level due to net redemption of existing obligations. On the other hand, there was a two percent increase in total foreign debt because of net borrowings amounting to P48 billion.
Cruz said the increase in foreign obligations was partially offset by P15 billion revaluation resulting from the appreciation of third currencies and the peso against the US dollar.
Out of the total domestic debt, the BTr reported that direct loans amounted to P2.139 trillion, of which government securities accounted for P2.119 trillion.
Out of the total foreign debt, on the other hand, direct loans accounted for only P663 billion while the rest were foreign denominated securities amounting to P1.066 trillion.
The BTr also reported that the total contingent debt of the national government declined by P7 billion from P570 billion at the end of 2006 to P563 billion. This was the result of the net appreciation of the peso against the US dollar.
The government said it was expecting a much bigger drop in the national government debt to 41 percent of gross domestic product by 2010.
During the annual Philippine Development Forum last week, economic officials told the donor community that it expected the consolidated public sector to start generating surplus as early as 2008 and the national government by 2009.
In the presentation made before the PDF, economic officials said the government has revised its original projected drop in the national government debt as a proportion of the gross domestic product.
In the original baseline scenario, the national government debt was projected to fall to 70.3 percent of GDP this year, down further to 63 percent in 2008, then to 56.5 and 50.8 percent in 2009 and 2010.
In the revised scenario, the NG debt was seen falling from 65 percent of GDP in 2006 to 58.3 percent in 2007, 51.7 percent in 2008 and 45.8 percent in 2009.
By 2010, the NG debt was expected to fall to 40.7 percent of GDP, a dramatic drop from the original baseline scenario of 81.6 percent as of 2005.
The faster-than-expected decline in the ratio of NG debt to GDP was due both to the expected decline in borrowing requirements as the government was able to consolidate its fiscal position.
Moreover, the BTr was also able to clean up its debt portfolio and shift its obligations around by pre-paying the more expensive debts and replacing them with cheaper money.
Excluding the state-owned financial institutions that often generate surpluses and therefore have little need for borrowing, the non-financial public sector debt was expected to also drop faster down to 50.8 percent of GDP by 2010.
The baseline scenario had projected the non-financial public sector debt to drop to 68.8 percent of GDP by 2010 from 92.9 percent of GDP in 2005.