Debt payments drop 29% to P303 B in 8 months

MANILA, Philippines - The country’s debt payments continued to decline in the first eight months of the year, mainly due to significantly lower payments for principal obligations.

Data from the Department of Finance showed that from January to August, the government spent P303.23 billion to pay portion of its debts, down 28.66 percent from P425.08 billion a year ago.

Total principal payments fell 62 percent to P74.66 billion during the eight-month period, including P2.57 billion in domestic debts and P72.09 billion in foreign loans.

The government likewise paid a total of P228.56 billion in interest, covering P152.77 billion in local borrowings and P75.79 billion in foreign obligations.

Total interest  payment for the period amounted to  P228.56 billion, same level as the previous year.

Domestic obligations included P118.07 billion incurred through the sale of fixed-rate Treasury bonds and P31.6 billion worth of retail treasury bonds.

In August alone, the government settled P25.29 billion in debt, 74.7 percent lower than the P40.89 billion paid in the same month last year.

Of the P25.29 billion,  P4.69 billion was paid to cover principal payments, comprising P3.98 billion in foreign debt and P718 million in domestic obligations.

Interest payments for the month reached P20.6 billion, slightly higher than the P18.23 billion shelled out  in August 2013.

Principal debts are paid using proceeds from fresh loans while interest payments form part of the government’s budget.