September debt service bill falls by 26% to P54.45 billion

THE NATIONAL Government in September made debt service payments of P54.45 billion, falling 26.48% year on year following a decline in amortization payments, the Bureau of the Treasury (BTr) reported, citing preliminary data.

Around 87.9% of the debt service bill consisted of interest payments, which were up 10.36% at P47.86 billion in September.

Interest paid on domestic debt rose 12% year on year to P40.11 billion. This consisted of P26 billion in interest payments for fixed-rate Treasury bonds, P12.79 billion for retail Treasury bonds and P1.29 billion for Treasury bills.

Interest paid on foreign debt rose 2.47% year on year to P7.752 billion.

Meanwhile, amortization payments fell 78.52% to P6.59 billion in September.

All principal payments went to foreign creditors that month. The BTr did not settle any of outstanding principal with domestic lenders.

Despite the drop in September, the nine-month debt service bill rose 15.47% to P963.86 billion.

A total of 64.79% went to amortization payment, while the rest went to interest.

Amortization payments from the first nine months stood at P624.51 billion, rising 19.698% year on year. This consisted of P405.4 billion for domestic debt and P219.11 billion for external obligations.

Interest payments also rose 8.43% to P339.348 billion during the period. This included P257.62 billion to settle interest on domestic debt and P81.73 billion for interest on foreign debt.

The government borrows from foreign and local sources to plug its budget deficit as it spends more than it makes to support programs that will stimulate economic growth.

The National Government’s gross borrowings hit P2.6 trillion at the end of September as it continued to raise funds to respond to the coronavirus crisis, according to separate data from the BTr.

Gross borrowing in the first nine months rose 15.143% from a year earlier. — Jenina P. Ibanez