Government debt payments slashed by 65 percent in Q1

MANILA, Philippines — The Marcos administration slashed its debt payment by 65 percent to P342 billion in the first quarter, largely on lower settlement of the loan principal borrowed by the government.

Data from the Bureau of the Treasury showed that the government brought down its debt payment in the first three months, settling some P342.02 billion in obligations, down 65 percent from P986.04 billion in the same period last year.

About 70 percent or P241 billion of the debt service was for interest payments, rising by 25 percent from P192.99 billion year-on-year.

Nearly 75 percent of the interest payments at P178.56 billion were issued to domestic creditors.

Broken down, the government paid the interest for P124.83 billion in fixed-rate Treasury bonds, P39.63 billion in retail T-bonds and P12.24 billion in Treasury 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 P62.44 billion in interest owed to foreign financiers in the first quarter.

On the other hand, amortization or the settlement of principal dropped by nearly 90 percent to just P101.02 billion from P793.04 billion in January to March 2024.

Almost the entire payment for amortization at P100.45 billion was remitted to external sources. Only P576 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 end-March, the government had settled 16.7 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 P16.68 trillion as of end-March.