Debt payments climb to P1.36 trillion in 7 months

MANILA, Philippines — The government hiked its debt payments by 40 percent to P1.36 trillion as of end-July, with the bulk going to amortization to domestic lenders.

Data from the Bureau of the Treasury showed the Marcos administration jacked up its debt payments by 40.3 percent to P1.36 trillion in January to July, from P972.39 billion in the same period last year.

Roughly 67 percent of the debt service was for amortization or the settlement of the principal amount at P907.3 billion.

This is 45 percent higher than the P626.28 billion paid in the comparative period.

On the other hand, interest payments rose by 32 percent to P456.66 billion from P346 billion in the seven-month period last year.

Spending on amortization goes to returning the loan principal, while interest payments go to complying with interest obligations.

For amortization, the bulk at 84 percent amounting to P757.62 billion was remitted to domestic creditors.

The remaining P149.68 billion principal payments were made to foreign sources.

Further, a little over 70 percent of the interest payments at P323.36 billion were issued to domestic creditors.

Broken down, the government paid the interest for P217.53 billion in fixed-rate Treasury bonds (T-bonds), P78.24 billion in retail T-bonds and P18.68 billion in Treasury bills (T-bills).

The Treasury sells government securities every week to generate funding for public programs and projects.

Short-dated T-bills have tenors of 91 days, 182 days and 364 days while long-term T-bonds have maturities of up to over 20 years.

Aside from payment to local lenders, the government settled P133.3 billion in interest owed to foreign financiers in end-July.

As of end-July, the government has settled 67 percent of its total debt service for 2024 which is at a record P2.03 trillion.

This is divided into a 77:23 mix in favor of domestic creditors.

The government intends to spend P763.44 billion for interest payments and return P1.26 trillion worth of principal to comply with the amortization of debts mostly to local lenders as well.

Currently, the country’s outstanding debt is at a record P15.69 trillion as of end-July.

For next year, the government targets to settle P2.05 trillion in debts, divided into P848.03 billion for interest payments and P1.2 trillion for principal amortization.

This will just be a percentage higher from the target P2.03 trillion debt service for 2024.