Debt payment rises threefold in January

April 2, 2024 | 12:00am

MANILA, Philippines — The government jacked up its debt service by more than threefold to P159 billion in January as payments for interest and amortization both increased.

Data from the Bureau of the Treasury showed that the government hiked its debt payments at the onset of the new year to P158.9 billion, or about 232 percent higher than the P47.83 billion it paid in the same period last year.

About 53 percent or P84.68 billion of the debt service was for amortization or the settlement of principal. This was a significant jump from just P861 million year-on-year.

On the other hand, interest payments also dropped by 58 percent to P74.22 billion from P46.97 billion in January 2023.

Spending on amortization goes to returning the loan principal while interest payments go to complying with interest obligations.

Almost the entire payment for amortization at P84.54 billion was remitted to external sources. Only P138 million in principal payments were made to domestic creditors.

About 65 percent of the interest payments at P48.82 billion were issued to domestic creditors.

Broken down, the government paid the interest for P40.93 billion in fixed-rate Treasury bonds (T-bonds), P3.56 billion in retail T-bonds and P2.6 billion in Treasury bills (T-bills).

The Treasury sells government securities every week to generate funding for public programs and projects.

Short-dated T-bills have tenors of 91 days, 182 days and 364 days while long-term T-bonds have maturities of up to over 20 years.

Aside from payment to local lenders, the government settled P25.4 billion in interest owed to foreign financiers in January.

As of January, the government has settled eight percent of its total debt service for 2024, which is at a record P1.91 trillion.

This is divided into a 77:23 mix in favor of domestic creditors.

The government intends to spend P670.47 billion for interest payments and return P1.24 trillion worth of principal to comply with the amortization of debts mostly to local lenders as well.

Currently, the country’s outstanding debt is at an all-time high of P14.79 trillion as of end-January.

The country’s debt service hit a record P1.6 trillion last year as the government moved to cut borrowings incurred during the pandemic.