Gov’t debt service bill dips in July

THE NATIONAL Government paid P60.54 billion in debt in July, dipping from a year-ago level due to slightly lower interest and amortization payments, the Bureau of the Treasury (BTr) reported.

Preliminary BTr data showed the government’s debt service bill slipped by 0.61% from P60.911 billion in the same month in 2020.

In July, around 97.5% of the total debt repayments went to interest payments, and the rest for amortization.

Overall interest payments fell by 0.59% to P59.03 billion in July. Broken down, interest paid on local debt rose by 7.25% year on year to P36.88 billion. This consisted of P31.5 billion in interest payments for Treasury bonds, P4.33 billion for retail Treasury bonds and P1.045 billion for Treasury bills.

This was tempered by the lower interest paid on foreign debt, which dropped by 11.4% to P22.149 billion.

Amortization payments slipped by 1% to P1.511 billion in July from P1.527 billion in the same month of last year.

All principal payments went to foreign creditors while the BTr did not settle any of its outstanding debt from local lenders that month.

Despite the drop in July, the seven-month debt service bill climbed by 37% to P834.33 billion from P608.26 billion in the same period in 2020.

Around 68% went to amortization payment, and rest went to interest.

Principal payments from January to July stood at P566.77 billion, climbing 53.9% from P361.2 billion the year prior. This consisted of P405.23 billion for domestic debt and P161.53 billion for foreign obligations.

Interest payment also jumped by 8.3% to P267.56 billion in those seven months from P247.06 billion in the same period of last year. This included P196.2 billion to settle interest on local debt and P71.35 billion for external debt interest payment.

The government borrows from foreign and local sources to fund its budget deficit as the state spends more than the revenue it generates to support programs that will stimulate economic growth.

Debt watcher S&P Global Ratings has said the Philippines is among the emerging markets that it expects to remain resilient in the event that interest rates rise and costs of debt servicing increase, based on a May 24 note. 

The National Government has incurred P2.27 trillion in gross borrowings as of July, up 22% year on year according to a separate BTr data.

For this year, the state has programmed a P1.26-trillion debt service bill, 31% higher than the actual P962-billion bill in 2020. — BML

Gov’t debt service bill dips in July
Source: Bantay Radio