RP CAN SAVE Php 24 BILLION IN FOREIGN DEBT PAYMENTS
MANILA, February 13, 2006 (STAR) By Jess Diaz - The Philippines could save P24 billion in foreign debt payments if the peso exchange rate settles at 51 to the dollar, the chairman of the House appropriations committee said yesterday.
Camarines Sur Rep. Rolando Andaya Jr., who takes over as budget secretary this week, said an improvement of P1 in the exchange rate translates to P24 billion in savings in principal and interest payments on the nation’s foreign debt.
He said since the P721.7-billion debt payment fund for this year is premised on an exchange rate of 57 to $1, an improvement of P6 in the value of the local currency means P24 billion in savings.
On Friday, the exchange rate breached the P52 level, closing at 51.45 to the dollar, its highest in three and a half years.
Andaya said at a steady rate of P52, the country would already realize debt payment savings amounting to P20 billion.
"More funds freed from debt service can be channeled to productive expenditures. We can use the savings to hire more doctors, build roads, improve our schools, and for other expenses that will in turn lure investments, spur growth and create jobs," he said.
"Or we can use it to pay down our debts. But the best option lies in between: use part of the savings to retire our debts, and plow back the greater part to the people in new projects to show them that the taxes they pay are rebated to them, that tax obedience begets better governance," Andaya added.
He pointed out that the outstanding public sector debt of P5.5 billion "poses a heavy burden, prompting the government to allot 34 centavos of every budget peso just to meet interest expense alone this year."
That is about a third, or roughly P340 billion, of the proposed P-1 trillion 2006 national budget, which the House is scheduled to start tackling in plenary session today. That amount excludes payments for loan principal, which are not part of the annual budget because under a decree issued by the late President Ferdinand Marcos during martial law, Malacañang is authorized to appropriate them.
With the failure of Congress to enact a 2006 budget up to now, the Palace appropriates funds not only for principal amortizations but for interest payments as well.
Chief News Editor: Sol Jose Vanzi
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