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The government’s fight to chip away a big chunk of the debt load from the yearly national budget was on a see-saw in recent years, falling to a historic low of 21.4 percent in 2009 from a 10-year high of 31.6 percent in 2005.

The percentage of debt service to the national budget, was, however relatively stable during the fiscal years of 2001 to 2004, posting an annual of average of 28.2 percent.

This was despite the 20.9 percent jump in the national budget to P864.8 billion in 2004 from P715 billion in 2001.

From a low of 21.4 percent in 2009, the government has earmarked 23.1 percent of the P1.541 trillion budget this year to debt service.

The 2010 nominal debt service represented a 67.2-percent decline from 2009.

The national debt stock of the government for 2010 is expected to hit P4.7 trillion and to widen to P5 trillion in 2011, coming from a 1999 debt load of P1.775 trillion.

Way back in 1999, the government only paid P205.4 billion in debt payments.

Watchdog Freedom from Debt Coalition (FDC) said former President Gloria Arroyo was the most aggressive borrower and also the largest debt payer of all four previous presidents.

From 2001 to 2007, the FDC reported that the Arroyo government paid out P3.8 trillion to foreign and domestic lenders.

This is more than double the combined debt service payments of P1.8 trillion of her three predecessors from 1986 to 2000.

During this period, the group estimates that every Filipino carried a debt load of P42,819.42.

This does not include the national government’s contingent liabilities which are essentially potential debts as a consequence of government’s expressed or implied commitments to directly assume the liability of other entities should these fail to honor their obligations.

Former budget secretary Benjamin Diokno said the country’s outstanding debt might have grown to double its size from 2001 to 2009 and may even be bigger by the time President Arroyo ended her decade-long term last June 30, 2010.

Diokno said Arroyo incurred around P2.2 trillion worth of debt after 10 years, which increased the country’s outstanding debt to around P4.5 trillion to P4.8 trillion.

Diokno said that assuming the Philippines has a population of 90 million, each Filipino would have to shell out some P50,000 to pay off the country’s debt. Before President Arroyo’s term, each Filipino needed to contribute around P25,000 to pay off the country’s debt.

"In 2007, 2.7 million were unemployed, 6.8 million were underemployed and 2.3 million join the labor force every year. This was prior to the crisis. There is also a worsening poverty situation. Based on 2003 numbers, three in 10 Filipino families are poor. This means that the Millennium Development Goal of halving poverty incidence by 2015 may not be met," Diokno said during an election-related forum months ago.

From January to July this year, the government already paid P453.45 billion, down 5 percent from the P432.94 billion in the same period last year.

According to Finance Undersecretary Gil Beltran, the government’s debt payments are expected to reach P746.2 billion in 2010 from the programmed P702 billion last year.

Beltran said payments for maturing principal obligations will grow 3.6 percent to P405.4 billion, while interest payments will go up by 9 percent to P340 billion.

The country’s debt stock, on the other hand, is seen to increase to P4.723 trillion or 56.3 percent of gross domestic product (GDP) this year as the government retained a higher budget gap ceiling.

This year, the country is staring at a record fiscal shortfall of P325 billion or 3.9 percent of GDP, driven mainly by weak tax collection and the failure to privatize at least three big-ticket items for a combined price tag of P30 billion.

The new government suddenly turned conservative by only expecting a privatization proceed of P2 billion this year after putting in the freezer the disposal of the three items led by the 102-hectare Food Terminal Inc. (FTI) complex in Taguig City.

Budget Secretary Florencio Abad said next year’s percentage of the debt service to the proposed P1.645 trillion national budget would be around 23 percent or amounting to P357.1 billion.

This is relatively the same with the percentage share of the debt payments under this year’s current budget.

Abad expressed confidence that the debt service percentage to the national budget would continue to improve in the six years of the Aquino presidency as it limits its visits to the debt market.

"Since the deficit is declining over the coming years, the need to borrow becomes less," he said.

The budget chief, who also once chaired the House committee on appropriations, declined to provide for a target by how much the new government wants to bring down the share of debt service in the national budget.

The new government is likewise throwing away the target of balancing the budget by 2013 and would instead concentrate on lowering the deficit in the next three years through improved tax effort ratio.

While the percentage share of debt payments in the national budget has been declining in the recent years, the annual deficit has been conversely ballooning.

From a deficit of less than P130 billion in 2001, the funding shortfall is now seen breaching the P300 billion mark by the end of 2010 and will slightly go down to P293.2 billion next year.

Finance Secretary Cesar Purisima said the 2011 programmed deficit may still go down to P226 billion or 2.5 percent of GDP once the economy continues its faster growth that it has shown in the last two quarters.

The economy posted a growth of 7.8 percent in the first quarter as adjusted and a stronger 7.9 percent in the subsequent quarter.

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