Debt payments surge to P1.16 trillion in 10 months

MANILA, Philippines — The country’s debt payments soared to P1.16 trillion from January to October as the government settled more matured loans and interests, according to the Bureau of the Treasury (BTr).

Latest data from the BTr showed that debt service from January to October ballooned almost two times from P583.42 billion a year ago.

For October alone, debt payments rose by nearly eight percent to P27.19 billion from P25.2 billion in the same month in 2019.

Broken down, the bulk or 71 percent of the total debt service in the first 10 months was used for amortization, while the remaining 29 percent went to interest payments.

Principal payments amounted to P826.86 billion, a sharp 208 percent increase from P268.96 billion in the same 10-month period last year.

Of the amount, P698.89 billion went to domestic lenders, which include the repayment of the P300 billion short-term loan from the Bangko Sentral ng Pilipinas (BSP) in September. The remaining P127.98 billion was paid to external creditors.

Meanwhile, interest payments from January to October also rose by almost seven percent to P335.04 billion from P314.47 billion a year ago.

Earlier, the BTr said interest payments accounted for 10.12 percent of the total expenditures during the period, declining slightly from last year’s level of 10.7 percent. On the other hand, interest payments as a percentage of revenues inched up to 14.13 percent from 12.14 percent due to lower collections.

Data from the BTr showed that P239.5 billion of the total interest payments went to domestic debt, while the remaining P95.54 billion covered foreign loans.

The government allots a portion of its budget for the settlement of obligations on a monthly basis, depending on their maturity.

According to the Budget of Expenditures and Sources of Financing, the debt servicing program for this year was set at P1.005 trillion. This means that the total debt payments this year have already exceeded the budget.

Debt payments this year also surpassed the P842.45 billion paid in 2019.

For 2020, the Philippines is programmed to borrow P3 trillion to plug the deficit in its budget, which is expected to widen to 7.6 percent of gross domestic product.

The BTr said gross financing during the first 10 months has reached P2.835 trillion, which is 94.5 percent of the program.

As of end-October, the national government’s outstanding debt also increased by more than seven percent to P10.03 trillion from P9.37 trillion in end-September.

By the end of the year, the Philippines’ outstanding debt is seen to hit P10.16 trillion, before further increasing to P11.98 trillion in 2021. These would translate to a debt-to-gross domestic product ratio of 53.9 percent for 2020 and 58.1 percent for 2021.