THE National Government settled P547.347 billion in debt in the first half of 2020, up 42% from a year ago, data from the Bureau of the Treasury (BTr) showed.

The government’s debt service bill in the first six months accounted for a little over half of the P1.033-trillion debt payment target this year, based on the Budget of Expenditures and Sources of Financing report.

Latest BTr data indicated as of end-June, amortization made up 66% of the total at P359.67 billion, while the remaining 34% or P187.676 billion went to interest payments.

For the month of June, debt service payment fell 59% to P34.387 billion from P83.811 billion in June 2019, largely due to lower amortization. The June figure was 40% higher than May’s P24.642 billion.

In June, 80% of debt payments went to interest and 20% went to amortization.

Principal payments plunged by 83.55% to P6.826 billion in June, from P41.495 billion a year ago. This all went to external creditors as the government did not make principal payment to its local lenders during the month.

Interest payments totaled P27.56 billion, slipping by 5.28% year on year. Some 89% or P24.617 billion were paid to domestic creditors while 11% or P2.944 billion went to foreign sources.

In 2019, total debt payments reached P842.449 billion, up 16.1% from the previous year.

The government borrows from both domestic and foreign lenders to plug the budget deficit seen to hit 9.6% of gross domestic product this year amid rising pandemic expenses and weak state revenues.

The government targets to borrow P3 trillion this year, more than double the P1.4-trillion program set before the pandemic hit the country.

Gross borrowings in the first six months of the year reached P1.7 trillion, beating the P1.02 trillion raised for full-year 2019. Excluding the repayments made, net borrowings for the period reached P1.548 trillion.

The pandemic continues to pummel the economy, which is projected to contract by 5.5% this year following the 16.5% slump in the second quarter. — B.M.Laforga