Government cuts debt payments in April

MANILA, Philippines — The government narrowed its debt payments for the fifth consecutive month in April, putting the next administration in a tight spot to complete the settlements scheduled for the year.

Data from the Bureau of the Treasury showed that debt service fell by a third to P42.98 billion in April from P64.29 billion a year ago due to a double-digit decline in amortization.

Although interest payments rose by 57 percent to P37.3 billion, amortization plunged by 86 percent to P5.67 billion.

According to the Treasury, the bulk of the interest payments at P29.86 billion were made to local lenders who bought government bonds. The largest volume at P24.63 billion was paid for fixed-rate Treasury bonds, while the rest was settled for retail Treasury bonds (P3.58 billion), Treasury bills (P1.32 billion) and others (P335 million).

The Treasury auctions securities every week to raise financing for state programs and projects. Bonds payable in 91 days, 182 days and 364 days are offered every Monday, while debt papers maturing in years are sold every Tuesday.

On the other hand, the Treasury said the other P7.45 billion in interest payments were remitted to foreign financiers.

The government also paid all of its April amortization, wherein the principal is settled, to external creditors, marking zero principal payment for its domestic liabilities.

The last time the government raised its debt service on an annual basis was in November 2021, when it paid P81.24 billion as against November 2020’s P26.79 billion.

On a yearly scale, debt payments plunged by 39 percent to P356.63 billion in the four months to April from P585.6 billion during the same period in 2021. Interest payments went up by a fourth to P186.63 billion, but amortization slumped by 61 percent to P169.99 billion.

A total of P941.16 billion has to be issued in the next eight months to complete the debt service for the year. For 2022, the government plans to pay a record P1.3 trillion in obligations, of which P512.59 billion is interest payments and P785.21 billion is amortization.

Debt payments grew by 25 percent to P1.2 trillion last year, from P962.47 billion in 2020, as the government began repaying some of the loans it took out for pandemic response.