Gov’t debt service surged by 257% in Aug. to P664.7B
The government’s debt service burden more than tripled in August, driven by higher amortization payments following a mammoth settlement of maturing bonds.
Debt payments surged by 257 percent year-on-year to P664.7 billion, according to the latest cash operation report of the Bureau of the Treasury.
This brought the eight-month tally to P1.54 trillion, nearly flat from the comparable period last year. The amount accounted for 73 percent of the P2.1 trillion that the Marcos administration targeted to spend this year on debt servicing.
Amortization costs accounted for the surge. Payments ballooned 350 percent to P601.6 billion in August, though the year-to-date figure slipped 8 percent to P956.7 billion.
The Treasury said the state settled P597 billion in principal payments it owed to domestic creditors, nearly five times more than last year. This included the full settlement of P516.34 billion in maturing peso bonds, the largest repayment this year.
From January through August, principal payments to local lenders totaled P768.5 billion, down 13 percent.
Interest up, too
Payments to foreign creditors plunged 67 percent in August to P3.7 billion, though the year-to-date amount rose 17 percent to P188.2 billion.
Interest expenses also climbed. The government spent P63 billion in August, up 20 percent from a year earlier.
That was part of the state’s total expenditures during the month, which edged down by 0.74 percent to P437.3 billion. Under current rules, only interest payments are booked as part of expenditures, while principal repayments are treated as off-budget items recorded in financial accounts.
Since the beginning of the year, interest expense has reached P584 billion, 15 percent bigger year-on-year.
The Treasury reported that domestic creditors received P46 billion in August, 18 percent higher than last year, bringing the eight-month tally to P429 billion. Interest on foreign borrowings grew 25 percent to P16.7 billion, putting the total so far at P155 billion, up 6 percent.
This year, the government plans to borrow P2.6 trillion from lenders to plug a projected budget deficit of P1.6 trillion, equivalent to 5.5 percent of gross domestic product. The drive is expected to push the debt stock to P17.36 trillion by year’s end.
Fiscal planners say they will continue to favor onshore borrowing to limit exposure to foreign exchange risks. The Marcos administration has also made clear it is seeking an upgrade to an A-level credit rating, a distinction it hopes to achieve by keeping debt metrics in check while sustaining economic growth.
