Debt payment slips to P107 billion in January

MANILA, Philippines — The government slashed its debt service by a little over 30 percent to P107 billion in January as payments for amortization declined.

Data from the Bureau of the Treasury showed that the government reduced its debt payments at the onset of the new year to P106.51 billion, or about 33 percent lower than the P158.9 billion it paid in the same period last year.

About 98 percent or P104.44 billion of the debt service was for interest payments, a 41-percent jump from P74.22 billion year-on-year.

Nearly 70 percent of the interest payments at P72.29 billion were issued to domestic creditors.

Broken down, the government paid the interest for P63.67 billion in fixed-rate Treasury bonds, P3.58 billion in retail T-bonds and P3.24 billion 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 P32.15 billion in interest owed to foreign financiers in January.

On the other hand, amortization or the settlement of principal dropped by nearly 100 percent to just P2.08 billion from P84.68 billion in January 2024.

Almost the entire payment for amortization at P1.76 billion was remitted to external sources. Only P317 million in principal payments were made to domestic creditors.

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

As of January, the government has settled five percent of its total debt service for 2025 which is at a record P2.05 trillion.

This year, the government intends to spend P848.03 billion for interest payments on a 74:26 mix in favor of domestic creditors.

It will also return P1.2 trillion worth of principal to comply with the amortization of debts mostly to local lenders.

The country’s outstanding debt is at a record P16.31 trillion as of end-January.