Payment for state debts climb to P775 billion in 2018

MANILA, Philippines — The national government’s debt payments climbed to P775.59 billion as both interest and principal payments rose year-on-year, according to the Bureau of the Treasury (BTr).

Based on the latest cash operations report of the BTr, the national government settled P775.59 billion in liabilities last year, almost 14 percent higher than P680.47 billion in 2017.

This is likewise 5.7 percent higher than the P733.74 billion in payment programmed by the government for debt service, as indicated in the Budget of Expenditures and Sources of Financing (BSEF) document of the Department of Budget and Management (DBM).

For December 2018 alone, debt payments jumped more than three-fold to P87.18 billion from P27.96 billion in the same month in 2017.

The government allots a portion of its budget for debt payments to settle obligations on a monthly basis, depending on their maturity.

According to Treasury data, P349.22 billion of the total debt service last year went to interest payments, which increased 12.45 percent from P310.54 billion in 2017.

The BTr said in an earlier statement this is about one percent below the P354.01 program, generating savings of P4.8 billion.

 “The growth in (interest payments) for 2018 was attributed to discounts on Treasury Bills issued in 2018, coupon payments of new debt issued in 2017, and upward adjustments in foreign debt servicing due to peso weakness and higher LIBOR (London Inter-bank Offered Rate) rates,” the Treasury said.

The DBM said interest payments as a share of government spending declined to 10.2 percent from 11 percent in 2017.

“This is credited to the debt liability management strategies implemented by the government, retiring more expensive loans and favoring local currency denominated debt to minimize exposure to foreign exchange rate volatility,” the DBM said.

Further broken down, P243.23 billion of total debt payments last year went to domestic lenders, while the remaining P105.98 billion went to foreign creditors.

Interest payments for December alone, amounted to P29.213 billion, about 42 percent higher than the P20.554 billion a year ago.

Meanwhile, Treasury data also showed that payments for amortization in 2018 grew by 15.3 percent to P426.37 billion from P369.93 billion the previous year.

The bulk or P315.05 billion of the amount was paid to domestic lenders, while the remaining P111.33 billion went to foreign creditors.

December amortization reached P57.97 billion, almost eight-fold the P7.41 billion recorded in the same month in 2017.

Debt payments form part of the government’s expenditures. 

In 2018, disbursements rose by nearly 21 percent to P3.408 trillion from P2.82 trillion in 2017. This also exceeded the government’s revised disbursement target of P3.346 trillion.

For 2019, the national government is programmed to spend P887.91 billion for debt service, based on the 2019 BESF. This is 14.5 percent higher than the actual debt payments made in 2018.