Debt payments up 24%

THE AMOUNT of debt paid by the government in July increased by almost a fourth year-on-year to P66.6 billion as both payments for principal or amortization and interests rose, the latest Treasury data showed.

In July last year, the government settled P53.7 billion in interest and amortization combined, or 24 percent higher than this year’s level.

At the start of the second half, interest payments reached P53.1 billion, up by a tenth from P48.2 billion a year ago.

The interest paid for domestic debt in July hit P27.5 billion, while that for foreign liabilities was P25.6 billion.

As for amortization, payments in July hit P13.5 billion, 147-percent higher than P5.5 billion last year.

The amortization paid for domestic liabilities amounted to P11.7 billion; that for foreign debt, meanwhile, was P1.8 billion.

At the end of the first seven months, total debt payments stood at P391.4 billion, up 12 percent from P349.3 billion.

End-July interest payments reached P209.2 billion, while amortization amounted P182.2 billion.

As of the first half, the share of debt to the economy slid further amid an expanding gross domestic product (GDP) and decreasing borrowings due to higher revenues.

“A combination of robust revenues, lower deficit and stable interest rates led to the continuing drop in the debt-to-GDP ratio to 44.9 percent in June, from the end-2014 ratio of 45.4 percent,” the Department of Finance said in an economic bulletin last month.

For next year, the government will allocate P419.3 billion or 14 percent of the proposed 2016 national budget totaling P3 trillion for debt servicing. Outstanding national government debt as a percentage of GDP is expected to drop further to 41.8 percent next year.