Debt payments surge to P205 billion in April

MANILA, Philippines — The Marcos administration ramped up its debt service to P205 billion in April largely to pay for the loan principal borrowed by the government.

Data from the Bureau of the Treasury showed that the government significantly jacked up its debt payments in April, settling some P204.76 billion in obligations from just P42.98 billion in the same period last year.

Nearly 80 percent of the debt service was for amortization or the settlement of principal at P158.51 billion. In April 2022, the government paid a measly P5.67 billion in principal amount.

On the other hand, interest payment went up by 24 percent to P46.25 billion from P37.3 billion in the comparative period last year.

Spending on amortization goes to returning the loan principal, while interest payments go to complying with interest obligations.

The bulk or 97 percent of the payment for amortization at P153.96 billion was remitted to domestic creditors.

Only P4.55 billion in principal payments were made to external sources.

Meanwhile, close to 60 percent of the interest payments at P27.75 billion were issued to domestic creditors.

Broken down, the government paid the interest for P22.82 billion in fixed-rate Treasury bonds (T-bonds), P3.56 billion in retail T-bonds and P901 mllion 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 P18.5 billion in interest owed to foreign financiers in April.

For the four-month period, debt payment soared 116 percent to P770.48 billion from the P356.63 billion in January to April 2022.

The four-month amortization payment at P582.25 billion is almost four times higher than the P170 billion in the comparative period.

For January to April, interest payments, however, were almost flat at P188.23 billion.

As of end-April, the government has settled 48 percent of its total debt service for 2023, which is at a record P1.6 trillion in debt service expenditure.

This is divided into a 77:23 mix in favor of domestic creditors.

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 as well.

Currently, the country’s outstanding debt is at a record P13.91 trillion as of end-April.