Gov’t debt payments up 70% to P1.16 trillion

MANILA  -The government spent more money to settle its liabilities as of August 2023 compared with a year ago on the back of bigger principal and interest payments, data from the Bureau of the Treasury showed.

The state’s debt servicing bill amounted to P1.16 trillion in the first eight months, up by 70 percent versus last year’s P682.9 billion. In August alone, debt payments nearly tripled year-on-year to P189 billion.

Broken down, the bulk of the payments, or 66.5 percent, went to settling principal obligations while the remaining 33.5 percent covered interest charges.

By sources, 83.1 percent of the debt servicing bill was used to settle local borrowings amounting to P964.5 billion, and 16.9 percent was spent to pay foreign liabilities worth P196.8 billion.

Figures showed amortization payments in the January to August period more than doubled to P772.6 billion, from P342.8 billion a year ago. Interest payments, meanwhile, amounted to P388.7 billion year-to-date, up 14.3 percent from P340.1 billion paid during the comparable period last year.

Moving forward, analysts are expecting costlier debts for the government as a resurgent inflation triggered an aggressive response from the Bangko Sentral ng Pilipinas, which has brought the key rate to 6.50 percent after an off-cycle hike this week.

READ: Gov’t faces costlier pandemic debts

In the first eight months, 15.05 percent of government revenues went to just settling interest, up from 14.4 percent last year.

The government has so far paid 74.8 percent of its debt service program for this year, which is set at P1.55 trillion. The Marcos administration plans to spend P610.665 billion in interest payments and P941.353 billion in amortization payments in 2023.