By Aubrey Rose A. Inosante, Reporter

THE NATIONAL GOVERNMENT’S (NG) debt service bill plunged in January as amortization on domestic debt declined, the Bureau of the Treasury (BTr) said.

Latest data from the BTr showed that the NG’s debt repayments fell by 32.97% to P106.51 billion in January from P158.9 billion in the same month a year ago.

Debt service refers to payments made by the NG on its domestic and foreign debt.

Amortization or payments on the loan principal plunged by 97.55% to P2.08 billion in January from P84.68 billion in the same month in 2024.

This was mainly due to the 97.92% drop in amortization on foreign debt to P1.76 billion in January from P84.54 billion a year earlier. 

Domestic principal payments, on the other hand, more than doubled to P317 million in January from P138 million last year.

“The decrease in the debt service can be attributed to the lower external amortization paid by the government,” Oikonomia Advisory and Research, Inc. economist Reinielle Matt M. Erece said via Viber over the weekend.

Meanwhile, the bulk or 98% of January’s debt servicing went to interest payments.

Interest payments for the month surged by 40.71% to P104.44 billion from P74.22 billion in January 2024.

Broken down, interest paid on local debt went up by 48.06% year on year to P72.29 billion from P48.82 billion.

Domestic interest payments consisted of P63.67 billion in fixed-rate Treasury bonds, P3.58 billion in retail Treasury bonds (T-bonds), and P3.24 billion in Treasury bills (T-bills). Other payments stood at P1.8 billion.

Interest paid on external obligations jumped by 26.58% to P32.15 billion in January from P25.4 billion in the same month last year. 

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort attributed the lower debt service bill to seasonal factors.

“The sharp increase in interest payments may have to do with the still relatively higher interest rates since 2022 and the relatively weaker peso exchange rate in January 2025 that increased the peso equivalent of external debt interest payment as well,” Mr. Ricafort said.

The Bangko Sentral ng Pilipinas (BSP) kept the target reverse repurchase rate unchanged at 5.75% in February.

Meanwhile, Mr. Erece expects the debt service to go up in the next few months.

“I expect the debt service to grow in the following months, both as the result of the fiscal consolidation program that aims to lower the country’s outstanding debt, as well as the maturity of previously issued government securities, which are always oversubscribed,” he said.

Mr. Erece said the government is also planning to boost domestic borrowings.

“Moreover, the government plans to borrow more this year from the domestic debt market, i.e. T-bills and T-bonds, which can further increase the debt burden the NG may have to resolve,” he said.

The government is looking to borrow P735 billion from the domestic market in the second quarter, the BTr said on Thursday.

In 2025, the debt service program is set at P2.051 trillion, consisting of P1.203 trillion in principal payments and P848.031 billion in interest payments.