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Philippines: Debt payments reach record P1.2 trillion last year
MANILA, Philippines — The government paid a record P1.2 trillion in domestic and foreign debts last year as part of efforts to trim borrowings made during the pandemic.
According to the Bureau of the Treasury, debt service jumped by more than 25 percent to an all-time high of P1.2 trillion in 2021 from P962.47 billion in 2020.
In particular, interest payments increased by nearly 13 percent to P429.43 billion, while amortization ballooned by a third to P774.73 billion.
The government set aside P1.29 trillion for debt servicing last year as it started clearing some of the obligations acquired to finance its pandemic efforts. It also programmed P1.3 trillion for debt payments in 2022 to further consolidate the fiscal position to pre-pandemic levels.
Based on records, interest payments made to domestic creditors went up by over 19 percent to P333.34 billion in 2021. The bulk covered yields for fixed-rate Treasury bonds at P209.16 billion, and retail Treasury bonds at P101.28 billion.
On the other hand, interest payments on the external end posted a five percent decline to P96.1 billion.
Domestic amortization also rose by around 22 percent to P537.54 billion as redemptions made for bond-sinking funds amounted to a record P447.6 billion.
The Treasury also reported that investors claimed principals totaling P81.08 billion for domestic bond exchange and P6.56 billion for Premyo bonds.
For 2022, the government plans to spend P512.59 billion for interest payments on a 78:22 mix in favor of domestic creditors. Also, it looks to return P785.21 billion worth of principal to comply with the amortization of debts mostly to local lenders.
In 2021 the country’s outstanding debt went up by about 20 percent to P11.73 trillion due to double-digit increases in domestic and external obligations. The debt pile, when measured against the gross domestic product (GDP), spiraled to 60.5 percent.
As the highest in 16 years, the 2021 debt-to-GDP ratio topped both the government program of 59.1 percent and even the European standard of 60 percent, which the international community uses as a metric to determine the capacity to pay off debts.
Source: https://www.philstar.com/business/2022/03/14/2167027/debt-payments-reach-record-p12-trillion-last-year