Lower gov’t repayments bode ill for plan to cut debt

The national government’s payments to service its loans dropped by 12.6 percent in the 11 months to November of 2022, which suggests that the Philippines’ debt stock might not any time soon be reduced below 60 percent of gross domestic product (GDP), the threshold for what is considered a prudent indebtedness profile.

From January to November last year, the government shelled out a total of P991 billion in interest and principal payments on its borrowings, down from the P1.13 trillion paid out in the same period of 2021.

Data from the Bureau of the Treasury (BTr) show that in those 11 months, a total of P459.3 billion was spent on interest payments, showing an increase of 14 percent from the year-ago 402.1 billion.

On the other hand, a total of P531.8 billion in principal was repaid, a 27-percent drop from P732 billion in the first 11 months of last year.

For the entire 2021, the government spent P1.2 trillion in debt servicing, an increase of 25 percent from P962.47 billion in 2020. With one month left, the tally so far for 2022 is just 83 percent of the 2021 level.

As of the end of September last year, the Philippines’ debt stock stood at P13.52 trillion or 63.7 percent of GDP, the nation’s wealth in terms of goods and services produced and paid for within the country.

Of the total outstanding obligations, 31 percent or P4.22 trillion is owed to foreign lenders while 69 percent or P9.3 trillion is from local lenders.

ING Bank said in a commentary the Philippines’ debt-to-GDP ratio is a concern, saying it remained elevated, pegging it at 62.5 percent, and expects it to remain above 60 percent for the next four years. INQ