Heavy amortizations swelled gov’t debt repayments in January ’26
The national government’s debt service burden ballooned in January after a nearly fourfold jump in amortization payments, compounded by rising interest costs.
According to the Bureau of the Treasury (BTr), the state’s debt service bill surged 29.2 percent to P137.69 billion at the start of the year.
The spike reflected a whopping 392.5-percent increase in principal payments, which rose to P9.852 billion from P2 billion in the same month last year.
Most of the increase came from domestic obligations, which ballooned 2,454 percent to P8.096 billion from just P317 million. The figure more than offset a minimal 0.11-percent decline in amortization to foreign lenders, which fell slightly to P1.756 billion.
Even so, John Paolo Rivera, senior research fellow at the Philippine Institute for Development Studies, said the massive bloat was not unusual at the start of the year.
“Debt repayments are often lumpy due to the timing of maturities and refinancing schedules, so a single month can show large swings. It’s still worth monitoring in the broader context,” he said.
“For now, it appears more like a timing effect rather than a structural concern, but the trend over the next few months will be key,” he added.
Meanwhile, the continued rise in interest payments added to the debt service pile, totaling P127.82 billion, or 22.4-percent higher than a year ago.
Of this, the government paid P94.6 billion in domestic interest, 30.8-percent higher than in January 2025. Fixed-rate treasury bonds accounted for the bulk at P85.4 billion.
Payments to external creditors were more modest, with interest rising 3.4 percent to P33.2 billion.
“If elevated amortizations and rising interest payments persist, they could begin to tighten fiscal space, meaning less room for spending on infrastructure and social programs,” Rivera added.
Looking ahead, the government’s fiscal space may come under pressure due to the Middle East war, which has already prompted the country to respond with subsidies and a potential suspension of fuel excise taxes.
Finance Secretary Frederick Go, however, recently said the government had no plans to increase its borrowing program, instead aiming to manage spending on the expenditure side.
As it stands, BTr has been rejecting offers in recent Treasury bill and bond auctions as investors demanded higher yields. This led to the government falling short of its borrowing target in March, with issuances only partially awarded.
The national government’s outstanding debt reached a fresh peak of P18.13 trillion in January, which the BTr said was driven by front-loaded borrowings amid mounting global market uncertainties.
January’s debt service pile accounts for nearly 7 percent of the government’s P2.005 trillion ceiling for debt service expenditures in 2026. Of this, P950 billion is earmarked for interest payments, while P1.05 trillion is set aside for principal amortization.
The government’s 2026 borrowing program totals P2.68 trillion, with P627.1 billion from external creditors and P2.05 trillion from domestic sources, intended to cover a projected budget deficit of P1.65 trillion, equivalent to 5.3 percent of gross domestic product.
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