Gov’t shells out P 1.16T to repay debts

The national government’s debt payments further rose to a new high of P1.16 trillion as of end-October, bloated by the repaid borrowings from the central bank in September.

The latest Bureau of the Treasury data showed that the amount of debt settled by the government from January to October already exceeded the P842.4 billion paid for the entire of last year.

End-October amortization payments amounted to P826.9 billion, of which P698.9 billion were for domestic debt.

The Treasury’s repurchase agreement with the Bangko Sentral ng Pilipinas (BSP) for P300 billion in zero-interest borrowings last March—at the onset of the longest and most stringent COVID-19 lockdown in the region—was repaid six months later.

In October, the Treasury and the BSP renewed their repo deal for a bigger P540 billion.

Meanwhile, primary amortization for external debt reached P127.9 billion during the first 10 months.

The government also paid P335 billion in interest for the 10-month period, of which P239.5 billion were for locally sourced borrowings and P95.5 billion for foreign debt.

In a separate report last week, the Department of Budget and Management (DBM) noted that end-October interest payments increased by 6.5 percent from P314.5 billion a year ago.

During the month of October alone, interest payments also increased by 6.5 percent to P22.1 billion from P20.7 billion a year ago “largely due to the issuance of new five-year fixed-rate treasury bonds last October 2019,” the Treasury explained.

In a Dec. 9 report, the Washington-based Institute of International Finance (IIF) said the BSP was among “only a few” emerging market central banks that “actively provided government financing” to fight the pandemic.

The IIF said emerging markets “have generally been more cautious than developed markets in their monetary and fiscal responses” mainly due to concerns about debt and financing.

Last month, the IIF said a jump in interest payments on top of higher amortization for ballooning debt would burden emerging markets like the Philippines.

Budget documents for 2021 showed interest payments had been programmed to climb to P420.9 billion this year from P360.9 billion last year. —Ben O. de Vera INQ