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Philippines: Debt payments cut by 80 percent in January
MANILA, Philippines — The government reduced its debt service by nearly 80 percent to P48 billion in January as payments for interest and amortization declined.
Data from the Bureau of the Treasury showed that the government reduced its debt payments by nearly 80 percent at the start of the year to P47.83 billion from P215.84 billion in January 2022.
The bulk of the debt service was for interest payments at P46.97 billion, a 28 percent decline from the P65.55 billion recorded in January 2022.
On the other hand, amortization or the settlement of principal plummeted by almost 100 percent to P861 million from P150.29 billion.
More than 55 percent of the interest payments, equivalent to P26.65 billion, was paid to domestic creditors.
Broken down, the government paid the interest for P21.87 billion in fixed-rate Treasury bonds, P3.58 billion in retail T-bonds and P757 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 P20.32 billion in interest owed to foreign financiers in January.
Meanwhile, almost the entire payment for amortization at P858 million was remitted to external sources. Only principal payments amounting to P3 million were made to domestic creditors.
Last January, the government had paid off only three percent of its 2023 debt service expenditure, which amounted to a record P1.6 trillion.
The government intends to spend P582.32 billion for interest payments and return P1.02 trillion worth of principal to comply with the amortization of debts mostly to local lenders.
The country’s outstanding debt reached a record-high P13.7 trillion as of the end of January. The debt service hit a record-high P1.3 trillion last year as the government moved to cut borrowings incurred during the pandemic.
Source: https://www.philstar.com/business/2023/04/10/2257658/debt-payments-cut-80-percent-january