THE NATIONAL Government’s (NG) debt payments nearly doubled to P907.93 billion during the first half of the year, mainly due to the increase in principal amortization.
Preliminary data from the Bureau of the Treasury (BTr) showed the government’s debt payments surged by 98% in the January-June period from P458.355 billion in the same period last year.
In the first six months, more than two-thirds or 68.89% of the debt service bill went to amortization.
Principal payments as of end-June more than tripled to P625.47 billion from P201.14 billion last year.
Broken down, amortization on domestic debt soared to P561.42 billion as of end-June from P153.38 billion a year ago.
Principal payments on foreign debt jumped by 34.1% to P64.05 billion in the first half from P47.76 billion in the same period a year ago.
Meanwhile, interest payments rose by 9.81% to P282.458 billion in the six-month period from P257.215 billion a year ago.
Interest on local debt slipped by 6.2% to P192.884 billion as of end-June from P205.687 billion last year.
Broken down, interest payments on domestic debt consisted of P108.366 billion for fixed-rate Treasury bonds, P74.731 billion for retail Treasury bonds, and P6.709 billion for Treasury bills.
Meanwhile, interest paid on foreign debt jumped by 73.8% to P89.574 billion in the first semester from P51.528 billion a year ago.
JUNE DEBT SERVICE BILL
In June alone, the debt service bill doubled to P88.4 billion from P44.29 billion in the same month in 2022.
Month on month, debt payments surged by 80.2% from P49.05 billion in May.
More than half (59.8%) of the total debt servicing during the month went to interest payments.
Interest payments in June rose by 43.9% to P52.88 billion from P36.75 billion in the same month in 2022.
Interest paid to domestic creditors rose by 20.9% to P40.28 billion. This consisted of P25.62 billion in retail Treasury bonds, P11.412 billion in fixed-rate Treasury bonds, and P1.55 billion in Treasury bills.
Interest paid to external creditors surged by an annual 268.2% to P12.604 billion in June.
Meanwhile, amortization payments skyrocketed (371.4%) to P35.517 billion in June from P7.534 billion in the same month in 2022.
Domestic debt payments ballooned to P27.981 billion in June, while amortization on foreign obligations inched up by 5% to P7.536 billion.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort in a Viber message said that the higher debt service bill was partly due to elevated inflation, which drove up government expenditures.
Headline inflation eased to 5.4% in June from 6.1% in May, still well above the central bank’s 2-4% target range.
For the first half, inflation averaged 7.2%.
The Bangko Sentral ng Pilipinas (BSP) expects inflation to average 5.6% this year.
Mr. Ricafort also noted there was an increase in borrowing costs due to rising interest rates.
The BSP has raised interest rates by 425 basis points (bps) from May 2022 to March 2023, bringing the key rate to 6.25%, a near 16-year high.
“Higher debt servicing is also a function of more maturities of government securities earlier this year,” Mr. Ricafort added.
The government’s debt service program this year is set at P1.552 trillion. This is composed of P914.353 billion in amortization payments and P610.665 billion in interest payments.
Next year, the government set its debt servicing program at P1.91 trillion. Broken down, this consists of P670.471 billion for interest payments and P1.24 trillion for principal amortization. — Luisa Maria Jacinta C. Jocson