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Government debt service bill declines 34% in July

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THE National Government’s debt service bill fell by a third in July on the back of a drastic reduction in amortization payments, data from the Bureau of the Treasury (BTr) showed.

Based on the latest Treasury data, the government’s debt payments reached P60.91 billion in July, down 34% from P92.46 billion paid in July 2019. However, it is 77% higher than the P34.4 billion paid in June.

Amortizations plunged by 96% to P1.527 billion in July after the BTr did not settle any principal debt with its local creditors that month. The entire amount went to settle the principal of its foreign debt, which is 1.42% lower year on year.

Interest payments rose 16.5% to P59.38 billion, with 58% going to domestic lenders and the rest to external sources.

Interest paid on its local debt reached P34.39 billion, up 12.2% year on year. Broken down, P1.47 billion went to pay interest on Treasury bills, P28.59 billion for Treasury bonds and P4.33 billion for retail Treasury bonds.

Year to date, the government’s debt service bill dropped 15% to P608.26 billion. This represents 60.5% of the programmed P1.005-trillion debt payments for the entire 2020.

Principal repayments accounted for 59% of the total, while the remaining 41% went to interest payments.

Amortization jumped 26% to P361.2 billion, while interest payments declined by 24% to P247.06 billion.

In 2019, total debt payments reached P842.45 billion, up 16% year on year.

The government aims to borrow P3 trillion from both domestic and foreign lenders this year to plug the budget deficit which is seen widening to 9.6% of gross domestic product amid the economic slowdown.

Separate Treasury data showed its gross borrowings totaled P1.857 trillion from January to July, surging 121% year on year.

Excluding debt repayments, the government’s net borrowings stood at P1.681 trillion in the seven-month period, up 131% from a year ago. — Beatrice M. Laforga





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