Philippines: Debt payments cut by 7.7% in 9 months

MANILA, Philippines — The government paid less debts during the nine-month period of the year largely due to a decline in principal amortization.

Data from the Bureau of the Treasury showed the government slashed its debt payments by 7.67 percent to P889.85 billion in January to September from P963.78 billion in the same period last year.

This, even as the government played catch-up in its payments in September alone, which soared by 280 percent to P207 billion from just P54.45 billion a year ago.

This means that the end-September debt service is 68.44 percent of the P1.3 trillion debt service expenditure for 2022.

The government still has a quarter to pay off the remainder of the debt at P410.15 billion.

Further, data from the Treasury showed that amortization or the settlement of principal skyrocketed to P147.1 billion in September from just P6.59 billion in 2021.

However, the nine-month amortization payment at P489.87 billion is still 22 percent lower than the P624.43 billion in the comparative period in 2021.

On the other hand, interest payments increased by 25 percent to P59.9 billion during the month from P47.86 billion. The bulk of the interest payments at P47.72 billion were issued to domestic creditors.

For January to September, interest payments picked up 18 percent to P400 billion from P339.35 billion.

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

Broken down for the month of September, the government paid the interest for P24.03 billion in fixed-rate Treasury bonds (T-bonds), P22.53 billion in Retail T-bonds and P744 million 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 P12.18 billion in interest owed to foreign financiers during the month.

Meanwhile, 87 percent of the amortization at P128.33 billion was remitted to domestic creditors with the remaining P18.77 billion in principal payments made to external sources during the month.

For this year, the government plans to settle a record P1.3 trillion in debts, divided into P512.59 billion for interest payments and P785.81 billion for amortization.

Debt payments swelled by 25 percent to P1.2 trillion last year, from P962.47 billion in 2020, as the government started paying off some of the loans it acquired for pandemic response.