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Gov’t debt service bill declines in October

BW FILE PHOTO

THE NATIONAL Government (NG) saw its debt service bill drop in October as lower amortization payments offset the rise in interest payments.

Preliminary data from the Bureau of the Treasury (BTr) showed the government spent P39.817 billion for debt servicing in October, down by 55.3% from P89.066 billion in the same month a year ago.

Month on month, debt payments fell by 80.76% from P206.996 billion in September.

In October, around 83.34% of debt repayments went to interest payments, while the rest went to amortization.

Interest payments inched up 5.23% year on year to P33.185 billion in October from P31.536 billion.

Broken down, interest paid on domestic debt slipped by 6.59% to P22.407 billion from P23.989 billion, while that for foreign debt surged by 42.81% to P10.778 billion from P7.547 billion.

Domestic debt consisted of P17.636 billion in Treasury bonds, P3.575 billion in retail Treasury bonds, and P706 million in Treasury bills.

Meanwhile, overall amortization payments slumped by 88.47% to P6.632 billion in October from P57.53 billion in the same month last year.

The BTr settled P894 million with domestic lenders, while principal payments to foreign creditors amounted to P5.738 billion.

From January to October, debt repayments decreased by 11.63% to P929.663 billion from P1.052 trillion, with amortization taking up 53.41% of the total.

Principal payments in the 10-month period stood at P496.502 billion, dropping by 27.19% from P681.957 billion a year earlier. This consisted of P408.833 billion in domestic debt and P87.669 billion in foreign obligations.

Interest payments went up by 16.79% to P433.161 billion from P370.884 billion in the similar period. These included P328.617 billion worth of payments to domestic creditors and P105.544 billion to foreign creditors.

The government borrows from local and external sources to help fund a budget deficit capped at 7.6% of gross domestic product (GDP) this year, as it spends more than the revenue it generates to support programs that would stimulate economic growth.

The government plans to spend P1.298 trillion on debt payments this year, with P785.21 billion allocated for principal and the remaining P512.59 billion for interest.

The National Government’s gross borrowings declined by 32.7% to P1.85 trillion as of end-October.

In the same period, its outstanding debt hit a record high of P13.64 trillion.

The country’s debt-to-GDP ratio stood at 63.7% at end-September, still above the 60% threshold considered manageable by most multilateral lenders.

The government is aiming to bring down the ratio to 61.8% by the end of the year and to 52.5% by 2028. — Luisa Maria Jacinta C. Jocson

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