Govt increases debt payments to P1.4T

The government paid more debts during the first nine months of the year mainly due to an increase in principal amortization, the state-run Treasury Bureau said over the weekend.

Data from the Bureau of the Treasury showed the government increased its debt payments to P1.4 trillion in January to September from P889.8 billion in the same period last year.

This as the government is catching up in its payments in September alone by 15 percent to P238.9 billion from just P206.9 billion a year ago.

Amortization, or principal payments, amounted to P940.1 billion during the first nine months, up by 91.92 percent from last year's P489.8 billion.

Interest payments from January to September 2023 reached P460.1 billion, a 15 percent increase from P400 billion last year.

Interest payments are used to meet interest obligations, whereas amortization costs are used to repay the loan principal.

The national government also experienced a notable increase in its debt payments in September this year due to higher amortization.

In the same treasury report, the BTr said the debt service bill in September alone reached P238.9 billion, up 15 percent from last year's P206.9 billion.

Principal payments in September alone amounted to P167.5 billion, higher by 13.9 percent than last year's P147 billion.

Data broken down: the national government paid P148.8 billion to domestic lenders and P18.6 billion to foreign creditors.

Meanwhile, interest payments reached P71.4 billion in September, up 19.3 percent from P59.8 billion in the same month last year.

Interest on local debt slightly increased by 16.9 percent to P55.8 billion this year from P47.7 billion in 2022.

Local interest payments in September 2023 consisted of P28.6 billion in fixed-rate Treasury bonds, P25.6 billion in retail Treasury bonds, and P1.6 billion in Treasury bills.

Interest on foreign debt amounted to P15.5 billion, also 28 percent higher than last year's P12.1 billion.

Higher debt service bills in September might be due to "higher government maturities (…) from August to September (this year)," Rizal Commercial Baking Corporation Chief Economist Michael Ricafort said.

"Higher US interest rates since 2022 also fundamentally increased the government's debt servicing bill. The weaker peso exchange rate versus the US dollar also increased the peso equivalent of the country's foreign debt, thereby increasing the national government's debt service bill," Ricafort said in a Viber message.

"However, relatively lower government bond maturities in (fourth quarter) 2023 to February 2024 could somewhat reduce the NG debt bill during this period," he added.