MANILA, Philippines - Government debt payments declined by a more than a fifth in August as both principal and interest settlements decreased, latest data from the Bureau of Treasury showed.
The government paid P24.63 billion in liabilities in August, down 21 percent from P31.19 billion in the same period last year. The payments combined interest and principal obligations.
Broken down, interest payments shrank by a fifth to P16.45 billion, while their principal counterparts dipped by a faster 22.8 percent to P8.18 billion.
Debt payments are recorded as part of government expenditures in its monthly fiscal performance. In August, the government posted a budget surplus of P18.1 billion which trimmed the year-to-date deficit to just P3.41 billion.
A surplus means the government earned more revenues than it spent during a particular period, while a deficit indicates otherwise. The Aquino government has set a deficit cap of P283.7 billion this year.
The government borrows in the domestic and foreign markets to bridge its deficit and to settle existing debts.
Broken down interest payments to domestic creditors totaled P15.95 billion, up slightly from P15.89 billion a year ago. The bulk of settlements was made to owners of Treasury bills and bonds.
T-bills and T-bonds are issued every two weeks to borrow money from the domestic market. T-bills have a maximum payment term of one year, while T-bonds’ maturities can run up to 25 years.
Interest payments to foreigners, for their part, amounted to P498 million in August, figures showed. This represented an 89.4-percent plunge year-on-year.
Meanwhile, principal settlements to local creditors reached P4.45 billion, plummeting by 58.02 percent from previous year’s P10.6 billion.
Foreign principal payments, on the other hand, decreased slightly to P3.73 billion during the same period.
For the first eight months of the year, total debt payments were still up by nearly a tenth to P418.13 billion from P380.44 billion last year.
In an interview last week, Budget Secretary Florencio Abad said debt payments as a proportion of the total budget will “continue its downtrend” to just 14 percent of the proposed P3.002-trillion outlay next year.