Subsidies for the poor hike government's debts

MANILA, Philippines - The Arroyo administration’s allotments for social safety nets—including subsidies for rice prices and electricity consumption of poor families—have increased the national government’s (NG) debts in March. The Department of Finance (DOF) said that the government borrowed P110 billion from domestic and foreign creditors—a three percent increase from February—resulting from liabilities brought about by importing rice and selling the grain at lower than market rates. While the subsidies hiked the national government’s obligations to P3.881 trillion, the amount was still P50 billion—or 1.3 percent—less than debt figures a year ago. Despite the debt hike, these figures indicate that government’s penchant for borrowing has stopped growing since 2006. “Total outstanding debt stood at P3.881 trillion, of which P1.595 trillion o 41 percent is owed to foreign creditors and P2.286 trillion or 59 percent to domestic creditors," the DOF said in a statement. According to data, domestic borrowing rose 1.6 percent or P36 billion from February to P2.286 trillion as the NG sold far more debt than it redeemed during the month. Similarly, the government’s foreign currency obligations also rose by five percent—P74 billion—to P1.597 trillion. However, it was still 9.1 percent below last year’s levels of P1.753 trillion. The finance department said that lower foreign currency debts resulted, among others, from a P49 billion depreciation of the peso against the US dollar. The bulk of NG’s foreign debts—at 89 percent—were in the form of US dollar bonds or notes and the rest were denominated in either Japanese yen or European Union’s euro. Contingent debt, or those incurred with NG guarantees or borrowed under its name, also declined from year ago levels by 6.7 percent to P519.6 billion from P557.2 billion. As recently as 2000, debts incurred by the national government surged by 22 percent but has been reduced since then owing to gains made by the fiscal consolidation program, which intends to control spending. - GMANews.TV