Government hikes debt burden share in 2023 budget

MANILA, Philippines — The government plans to increase the share of debt payment in the proposed record-high P5.268-trillion budget for next year.

Based on the Budget of Expenditures and Sources of Financing (BESF), 11.6 percent of the budget or equivalent to P611 billion would be allocated to pay off debts for 2023.

This is slightly higher than the 10.8 percent share in the budget or about P541.3 billion this year.

Next year’s debt burden includes P582.3 billion for interest payments and P28.7 billion for net lending.

The government targets to settle a record P1.6 trillion in debts, divided into P582.32 billion for interest payments and P1.02 trillion for principal amortization.

However, it should be noted that the principal amortization of debt is not included as an expense item under any accounting standards, whether in the private or public sector.

Settlements of debt obligations are expenses already recorded in the past. Principal amortization also does not contribute to additional debt because debt obligation is only transferred from an old creditor to a new creditor in the process of refinancing.

Finance chief Benjamin Diokno earlier maintained that the national debt remains within manageable levels.

The national debt stock is at its highest level of P12.79 trillion as of end-June. The debt pile inherited by the Marcos administration represents 62.1 percent of gross domestic product.

It is expected to increase to P13.43 trillion by yearend and to P14.63 trillion by end-2023.

The government targets to bring down the debt-to-GDP ratio to below 60 percent in three years as it banks on structural reforms and enhanced tax system.

Meanwhile, there may be no more free rides on EDSA carousel buses next year, as the government disapproved the P12 billion funding sought by the Department of Transportation (DOTr) to sustain the Service Contracting Program (SCP) or Libreng Sakay.

“We requested P12 billion for 2023 budget (for the SCP). However, it did not make it to the NEP [National Expenditure Plan],” Transportation Undersecretary Mark Steven Pastor yesterday said at a House hearing. Also turned down were funding requests for modernizing public utility vehicles and putting up new bike lanes.

As such, Pastor appealed before lawmakers to consider adding P12 billion to the DOTr’s budget for 2023 to sustain the free ride on EDSA carousel buses. He said the program benefits at least 250,000 commuters daily in a proof of its importance to mass transport.

“We are appealing to the legislative branch of government if we can set aside funds for the SCP so that next year we can sustain our program for Libreng Sakay,” Pastor said.

However, members of the House committee on transportation appear divided on the proposal.

Rizal Rep. Jojo Garcia, who also used to serve as general manager of the Metropolitan Manila Development Authority, said Congress should first evaluate the SCP as taxpayers’ money collected nationwide is used to subsidize the fares solely of Metro Manila commuters.

But ACT Teachers party-list Rep. France Castro said a program that benefits thousands of Filipinos should be given adequate funding.

Reacting to Garcia’s pronouncement, Pastor said the DOTr opened 288 routes across the Philippines for the SCP, but only maintained the EDSA corridor due to the volume of people taking it. EDSA carousel buses pass through six cities in Metro Manila, from Monumento in Caloocan City to the Philippine Integrated Terminal Exchange in Parañaque City.

Last week the DBM released the P1.4 billion funding demanded by the DOTr to keep the SCP running until the end of the year.

The Management Association of the Philippines, for its part, wants the DOTr to privatize the EDSA busway, complete the upgrades, and scale up the capacity of the transport system.— Elijah Felice Rosales