THE NATIONAL Government spent P42.975 billion to pay its debt in April, declining from a year ago, as it made significantly lower principal payments while disbursing more for interest, data from the Bureau of the Treasury (BTr) showed.

The BTr reported that the government’s April debt service bill was down by 33.15% from P64.29 billion in April 2021 and by 36% from the P67.389 billion seen in March 2022.

Out of the total debt service bill for April, over 86% went to interest payments and the rest was spent to return the principal amount borrowed.

Interest payments in April grew by 56.61% to P37.303 billion from P23.819 billion in the same month a year ago.

Broken down, payments made for interest on domestic borrowings soared by over 70% year on year to P29.86 billion.

Domestic interest payments were made up of P24.626 billion for fixed-rate Treasury bonds, P3.575 billion for retail Treasury bonds, and P1.32 billion for Treasury bills.

Meanwhile, interest expense for the government’s foreign debt climbed by 17.85% to P7.45 billion.

On the other hand, principal payments for April plummeted by 86% to P5.672 billion from P40.469 billion in the same month last year. This was made up entirely of payments for foreign debt.

From January to April, the National Government’s total debt service bill stood at P356.625 billion, falling by nearly 40% from P585.80 billion a year ago, as it spent less on repaying the principal amount of its obligations.

Principal debt payments made up 47.66% of the total bill for the period, while interest expense cornered the remaining 52.33%.

Broken down, amortization for the period slumped by 61% to P170 billion from P436.12 billion in the previous year.

Payments made for domestic debt totaled P153 billion in the first four months of 2022, a 47% decline from P291 billion a year prior, while spending on repaying foreign obligations stood at P16.98 billion, down by 88% from the P145.10 billion recorded in the same period last year.

Meanwhile, interest payments for the four-month period went up by 24.69% to P186.632 billion.

The government plans to spend P1.298 trillion for debt payments this year, with P785.21 billion to go to repaying the principal amount of its borrowings and the remaining P512.59 billion programmed for interest expense.

The Philippines logged a debt-to-gross domestic product (GDP) ratio of 63.5% as of the first quarter. This is higher than the 60% debt-to-GDP ratio considered manageable by multilateral lenders for developing economies.

Finance Secretary Carlos G. Dominguez III has said it would take 10 years to bring this ratio back to pre-pandemic levels.

The government expects the economy to grow by 7-9% this year. Philippine GDP expanded by a faster-than-expected 8.3% in the first quarter. — T.J. Tomas