Gov’t debt payment down 10% in 7 months

The amount of debt paid by the government in the first seven months dropped by 10 percent to P353.8 billion from P393.5 billion a year ago as both amortization and interest payments declined, according to Bureau of the Treasury data.

From January to July, the government paid P193.7 billion in interest, down from P209.2 billion last year.

The bulk of the interest paid worth P123.4 billion was for domestic debt, incurred mainly through the sale of treasury bills and bonds. The remaining P70.4 billion in interest payments was for foreign borrowings.

During the seven-month period, the government also paid P160.1 billion in amortization, down from P184.3 billion in 2015.

Amortization payments for domestic borrowings amounted to P85.5 billion, while P74.5 billion was paid for foreign debt.

In July alone, the government settled P61.1 billion in debt, of which P40 billion went to interest payments on top of P21 billion in amortization.

For 2016, the government had allocated P419.3 billion or 14 percent of the P3.002-trillion national budget for debt servicing.

Last year, the government’s debt payments rose 3.7 percent year-on-year to P534.1 billion as the increase in amortization outpaced the decline in interest paid.

In the meantime, despite a higher first-half general government debt, its share to the gross domestic product (GDP) as of end June improved to 35.4 percent from 36.1 percent a year ago and 35.8 percent a quarter ago.

Its share declined even as nominal general government debt rose 4.3 percent to P4.889 trillion at the end of the first half from P4.687 trillion last year.

To compare, the economy expanded by 6.9 percent year-on-year during the first semester.

The general government debt is composed of the aggregated outstanding liabilities of the national government, the Central Bank Board of Liquidators or CB-BOL, social security institutions and local government units (LGUs) less intra-sector holdings of government securities including those held by the Bond Sinking Fund (BSF)/Securities Stabilization Fund.

The latest DOF data showed that almost three-fifths of the general government debt was composed of domestic borrowings worth P2.836 trillion, with the remaining P2.052 trillion borrowed from foreign lenders.

The DOF attributed the increase in end-June general government debt to the 2.3-percent year-on-year rise in the national government’s outstanding debt to P5.948 trillion.

Net of BSF holdings, government debt rose by a faster 3.7 percent year-on-year to P5.299 trillion in the first half, DOF data showed.

“Of the total increment of P188.9 billion, domestic borrowings accounted for P33 billion as a result of lower BSF holdings, while availment of loans and foreign debt insurance, along with the impact of weaker peso, made up the remaining P155.9 billion,” the DOF said.

“Debt of LGUs, meanwhile, jumped 10.6 percent to P74.7 billion from P67.5 billion in the same period last year,” it added.

“Intrasector debt holdings were at P485.1 billion as of June, down 1.1 percent from the prior year,” according to the DOF.