Debt service bill declines in August
source: bworldonline.com

Debt service bill declines in August

THE NATIONAL Government saw its debt service bill drop in August from a year ago, as a decline in amortization payments offset the higher interest payments. 

Preliminary data from the Bureau of the Treasury (BTr) showed the government paid P68.3 billion for debt servicing in August, down by 9.04% from P75.09 billion in the same month a year ago.

Month on month, debt payment fell by 56.28% from P156.2 billion in July.

In August, around 54.94% of debt repayments went to amortization, while the rest went to interest, the BTr said.

Overall amortization payments slumped by 26.65% to P37.52 billion in August from P51.15 billion in the same month last year.

The BTr settled P22.78 billion with domestic lenders, while principal payments to foreign creditors amounted to P14.75 billion.

Interest payments increased by 28.59% year on year to P30.77 billion in August, with interest paid on foreign debt jumping by 294.49% to P10.38 billion despite domestic debt slipping by 4.27% year on year to P20.39 billion.

Domestic debt consisted of P11.19 billion in Treasury bonds, P7.94 billion in retail Treasury bonds, and P1.08 billion in Treasury bills.

For the eight-month period, the debt service bill slid by 24.91% year on year to P682.85 billion, with around 50.2% going towards interest payments, and the rest to amortization.

Principal payments from January to August stood at P342.77 billion, dropping by 44.52% from a year earlier. This consisted of P279.61 billion in domestic debt and P63.16 billion in foreign obligations. 

Interest payments jumped by 16.67% to P340.08 billion in the eight months ending in August. These included P258.5 billion worth of payments to domestic creditors and P81.58 billion to external creditors.

The government borrows from foreign and local sources to fund its budget deficit as it spends more than the revenue it generates to support programs that would stimulate economic growth.

The government wants to borrow P2.47 trillion to help fund its budget deficit this year, with a goal of sourcing 75% domestically.

The National Government has taken on P1.314 trillion in gross borrowing as of end-August, down by 38.06% year on year, according to separate BTr data.

Outstanding debt is expected to rise to P13.43 trillion by the end of 2022. As of end-August, debt stood at P13.02 trillion.

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

The Philippines registered a debt-to-gross domestic product (GDP) ratio of 62.1% as of the second quarter, above the 60% debt-to-GDP ratio considered manageable by multilateral lenders for developing economies.

The government estimates the debt-to-GDP ratio to drop to 61.8% at the end of the year. — Diego Gabriel C. Robles

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