Interest payments on the loans were lower on account of a lower foreign exchange. Compared to 2004, government’s interest obligations decreased by 14.6 percent from P260.9 billion.

For the month of December, the BTr recorded interest payments of P13.4 billion, lower by P11.1 billion from P24.5 billion programmed. In December 2004, interest payments amounted to P15.7 billion, 14.7 percent higher compared to the latest figure.

BTr chief Omar Cruz said they expect interest payments will also decline this year and that the economy’s "positive momentum" will continue.

Finance officials again stressed the need to balance the financing needs of the government to paying interest payments or the servicing of public debt, and funds for basic services.

Interest payments comprise more than one-third of the government budget and because of its huge payment, funds for basic services were sacrificed for the most part.

This "imbalance" has made the government vulnerable to potential shocks from currency depreciation, interest rate hikes, inflationary pressures and other fortuitous events.

Presently the country’s foreign debt is 76 percent of GDP.

Government will extend its tight fiscal measures this year until 2007 particularly in controlling expenditures to contain the national budget as it mulls new tax collection sources.

The DoF said the government continues to be optimistic on its outlook for this year because of significant gains in revenue collections in 2005.