By Luisa Maria Jacinta C. Jocson, Reporter
THE NATIONAL GOVERNMENT’S (NG) debt service bill nearly tripled in August due to a spike in amortization payments, according to the Bureau of the Treasury (BTr).
Data from the BTr showed that debt payments surged by 176.77% to P189.027 billion in August from P68.297 billion in the same month a year ago.
Month on month, debt service payments shot up by 193.7% from P64.358 billion in July.
In August, principal payments accounted for more than three-fourths or 77.4% of the total debt service bill.
Amortization payments soared by 290% to P146.359 billion during the month from P37.524 billion in the same month a year ago.
The BTr settled P141.618 billion with domestic lenders and P4.741 billion with foreign creditors.
Meanwhile, interest payments jumped by 38.65% to P42.668 billion in August from P30.773 billion in the same month a year earlier.
Interest paid on domestic debt increased by 44.86% to P29.536 billion. Domestic debt consisted of P17.85 billion in fixed-rate Treasury bonds, P8.883 billion in retail Treasury bonds, and P2.763 billion in Treasury bills.
Interest on foreign debt rose by 26.48% to P13.132 billion.
In the first eight months, debt service payments climbed by 70% to P1.16 trillion from P682.85 billion in the same period a year ago.
The bulk (66.53%) of the debt service bill in the January-to-August period consisted of principal payments.
As of end-August, amortization payments more than doubled to P772.636 billion from P342.771 billion a year ago.
Payments for domestic debt jumped by 151.5% to P703.118 billion, while amortization for foreign debt rose by 10.07% to P69.518 billion.
Meanwhile, total interest payments went up by 14.29% to P388.676 billion.
Interest paid on domestic debt inched up by 1.13% to P261.422 billion, while interest on foreign debt increased by 56% to P127.254 billion.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the increase in the debt service bill was due to higher interest rates and the weaker peso.
For the coming months, Mr. Ricafort said that the same factors would continue to affect the government’s debt repayments.
Last week, the Bangko Sentral ng Pilipinas (BSP) raised the benchmark rate by 25 basis points (bps) in an off-cycle rate hike.
This brought the key policy rate to 6.5%, the highest in 16 years. Since May 2022, the BSP has raised borrowing costs by a cumulative 450 bps.
“However, relatively lower government bond maturities in the fourth quarter to February 2024 could somewhat reduce the NG debt bill during this period,” he added.
For 2023, the government’s total debt service program this year is set at P1.55 trillion, composed of P610.665 billion in interest payments and P941.353 billion in amortization payments.
As of end-August, the NG’s outstanding debt stood at a record P14.35 trillion.
The government borrows from external and local sources to fund a budget deficit capped at 6.1% of gross domestic product (GDP) this year.
