The national government’s debt service bill plummeted year-on-year by 21.85 percent in February on the back of lower amortization payments, the Bureau of the Treasury (BTr) reported over the weekend.

Data from the BTr showed the February debt service bill declined to P293.615 billion from P375.714 billion in the same month a year ago.

But month-on-month, debt payments rose by 84.78 percent from P158.898 billion in January.

Of the total debt service bill in February, the bulk, or 83.71 percent, went to amortization. The remaining 16.29 percent went to interest payments.

Amortization, also called principal payments, for February alone declined year-on-year to P245.788 billion from P341.605 a year ago. But it is higher month-on-month from P84.677 billion in January.

Principal payments for domestic debt declined by 19.72 percent to P243.625 billion in February from P303.461 billion a year ago.

Amortization on foreign obligations plummetted 94.32 percent to P2.163 billion in February from P38.144 billion in the previous year.

Interest payments

Meanwhile, interest payments rose year-on-year by 40.21 percent to P47.827 billion in February from P34.109 billion a year ago.

Month on month, interest payments fell by 35.56 percent from P74.221 billion in January.

Broken down, interest on local debt increased by 56.67 percent to P34.350 billion from P21.924 billion a year ago.

Domestic interest payments consisted of P21.676 billion in fixed-rate Treasury bonds, P7.734 billion in retail Treasury bonds, P3.264 billion in Treasury bills, and P1.676 billion in other charges.

In the first two months of the year, the debt service bill reached P452.513 billion, 6.83 percent higher than P423.551 billion in the same period last year.

Amortization payments during the January to February period declined by 3.50 percent to P330.465 billion from P342.466 billion the same period last year.

Meanwhile, total interest payments surged by 50.53 percent to P122.048 billion in the two-month period from P81.079 billion a year ago.

Rizal Commercial Banking Corp. Chief Economist Michael Ricafort, in a Viber message, said there are relatively lower amount of maturing government securities in February 2024 compared to the large maturities a year ago.

"Much larger Treasury bond maturities/principal payments a year ago (...) resulted in a dramatic decline in the national debt servicing bill in February 2024," Ricafort said.

"Payment of larger amount of principal payments a year ago (February 2023) also somewhat reduced interest payments for February 2024," Ricafort added.