MANILA, Philippines — The government settled less of its local and foreign obligations in February, with payments reaching P33.3 billion during the month, according to the Bureau of the Treasury (BTr).
Debt payments in February were more than four times lower than the P144.64 billion in February 2020, as less amortizations were made.
The bulk of the total debt service in February at P31.17 billion went to interest payments, out of which P22.011 billion went to interest payments for local debt instruments that included Treasury bills and bonds, while P9.15 billion went to interest payments for foreign debt papers.
Meanwhile, the remaining P2.131 billion was used for principal payments to foreign creditors as no amortizations for domestic creditors were made during the month.
From January to February, total debt payments reached P253 billion, just below the total payments of P290.69 billion made in the first two months of 2020 after significantly higher repayments were made in January.
The national government’s total outstanding debt rose to a new record high of P10.4 trillion as of February as borrowings were ramped up to finance its pandemic response.
During the month, P78.37 billion was added to the debt portfolio because of net financing from local and external sources and currency fluctuations.
Of the total debt stock, 29 percent was sourced externally while the rest was domestic borrowings.
Finance Secretary Carlos Dominguez recently said the government would stick to its policy of maintaining debt sustainability in the long-term even as the country confronts a prolonged battle against the pandemic.
Instead of just providing subsidies to affected sectors, the government would continue to put more emphasis on implementing more reforms that will “restore the economy’s vigor,” Dominguez said.
The country’s debt in proportion to economic output has risen to 54.5 percent due to unplanned spending coupled with a reduction in revenues as pandemic lockdowns severely limited business activity.
This however, remains below the international acceptable threshold of 60 percent of gross domestic product, effectively giving the country elbow room to spend and borrow more to support the economy.