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Philippines: Govt debt payments hit P60B in July
Lower amortization expenses pulled down the national government’s debt servicing in July by more than 30 percent compared to the payments done a year ago, data released by the Bureau of the Treasury showed.
Debt payments in July settled at P60.91 billion, shrinking by 34.12 percent from the P92.46 billion recorded a year earlier.
Interest payments, which accounted for 97.49 percent of the total, expanded by 16.51 percent to P59.38 billion from P50.96 billion last year.
Domestic interest payments grew by 12.23 percent to P34.38 billion in the month from P30.63 billion in July 2019, while foreign ones picked up by 22.98 percent to P24.99 billion from P20.32 billion.
Amortization expenses, meanwhile, plunged by 96.32 percent to P1.52 billion from P41.49 billion a year ago. Foreign amortization accounted for the total as no domestic amortization was posted during the month.
Year-to-date, debt payments accelerated by 27.32 percent to P608.258 billion from P477.71 billion in the same period in 2019.
Last year, the government paid P842.44 billion to creditors, ballooning by 13.87 percent from P725.58 billion in 2018.
The Treasury bureau earlier reported that the national government’s outstanding debt rose to another all-time high at the end of July on the back of accelerated domestic and external borrowings..
The actual P9.16 trillion government debt as of end-July expanded by 1.2 percent or P110.08 billion from the P9.05 trillion in June.
Of the total debt stock, 31 percent was generated from external creditors while 68.3 percent was raised locally.
Domestic obligations reached P6.25 trillion, or 1.1-percent wider than the end-June figure of P6.19 trillion, while external debt expanded by 1.5 percent to P2.90 trillion.
Outstanding obligations a year earlier was P7.80 trillion, of which P5.25 trillion was domestic while P2.55 trillion was external.
The government’s outstanding debt is estimated to breach the P10-trillion mark by year-end as it plans to borrow more.
According to the Department of Budget and Management’s “2021 Budget of Expenditures and Sources of Financing” report, state obligations will reach P10.16 trillion by end-2020, up 31.42 percent from the P7.73-trillion liabilities at the end of last year.
Domestic debt is projected to reach P6.91 trillion — a 34.84-percent increase from P5.12 trillion at end-2019 — accounting for the bulk of outstanding obligations.
External liabilities will pick up by 24.67 percent to P3.24 trillion from P2.60 trillion last year.
Finance Secretary Carlos Dominguez 3rd earlier said the Philippines is capable of paying its growing number of loans that were mostly used to support the government’s response to the coronavirus disease 2019 (Covid-19) pandemic.
“Because our economy has slowed down during the Covid crisis, we have not been able to collect taxes as we had planned and we have also been spending a lot of money on our Covid response,” Dominguez said, adding the government had spent about P375 billion on that response alone.
“Because our collections are down and our expenses are up, we had to borrow money,” he said.
According to him, the government had planned to raise the country’s debt to 50 percent of gross domestic product this year from 39 percent in 2019 to take advantage of low interest rates.
The repayment of the loans, Dominguez said, would come from tax collections once people start working and reopen their businesses, which will eventually lead to economic recovery.
“The debt is very manageable and it is affordable for us,” he said.
“So, I’d like to assure the entire Filipino people that we have the capacity to borrow. We are borrowing at very low rates and we have the capacity to pay these loans in the future,” Dominguez said.
Source: https://www.manilatimes.net/2020/09/14/business/business-top/govt-debt-payments-hit-p60b-in-july/767818/