Debt payments rise to P108 billion in July

MANILA, Philippines, September 14 ------ The national government hiked its debt service by 33 percent more to P108 billion in July, mainly due to the increase in interest payments paid by the administration.

Latest data from the Bureau of the Treasury showed that the government increased its debt payments in July, shelling out P108.05 billion in obligations from P81.2 billion in the same period last year. About 98 percent of the debt service pile was from interest payments at P106.22 billion, which was nearly 34 percent more than last year’s level of P79.4 billion.

Domestic payments occupied the chunk of interest payments of 78 percent at P82.92 billion. Divided into segments, the government issued P73.6 billion in fixed-rate Treasury bonds (T-bonds), P3.6 billion in retail T-bonds and P3.9 billion in Treasury bills (T-bills).

The Treasury holds weekly auctions of government securities to generate funds, which are then allocated to finance essential public programs, infrastructure and national development projects benefiting communities throughout the country. Short-term T-bills mature in 91, 182 or 364 days, providing quick returns, while long-term T-bonds can extend beyond 20 years, offering stable investment options for sustained government financing needs. Apart from the payments to local lenders, the national government settled P23.3 billion to foreign creditors during the period.

Making a slight marginal 5.4 percent increase was the amortization payments made in the period that reached P1.84 billion, which is higher than the P1.74 billion given in July last year. Amortization spending covers repayment of the loan’s principal, essentially reducing the government’s debt. While interest payments settle borrowing costs and fulfill obligations to lenders.

Comprising the pile is P1.66 billion, paid out for external creditors. Only P178 million in principal payment was made to domestic lenders. For the seven-month period, the government’s total debt service fell to P876.2 billion from P1.36 trillion last year, a 35.6 percent decrease or P483.8 billion decline.

Recent Treasury data showed that the national government’s outstanding debt slightly inched up by 1.7 percent to a record high of P17.56 trillion as of end-July from P17.27 trillion as of end-June. While the increase against the total debt expectation is only 1.21 percent, it is equivalent to P210 billion and is above the full-year assumption of P17.35 trillion.

Source: philstar.com