PH debt service bill swelled in March to P533.5B

Bureau of the Treasury

The debt service bill of the Marcos administration swelled nearly four times year-on-year in March mainly due to fatter payments of domestic liabilities, data from the Bureau of the Treasury (BTr) showed.

The government settled P533.5 billion of its obligations in March, significantly higher than the P142.2 billion it paid to creditors a year ago, figures showed.

This pushed up the first quarter payments for liabilities by 74.3 percent to P986 billion, accounting for 51.6 percent of the government’s P1.91-trillion debt service plan for 2024.

Those payments for amortization and interest represent government funds that would have been better spent on more productive undertakings like infrastructure development and social programs.

Sharp rise

Dissecting the latest cash operations report of the BTr, the sharp increase in debt settlements in March was due to fatter principal payments amounting to P462.6 billion, over five times larger than a year ago when the state paid P81.3 billion.

BTr data showed most of the amortization settled in March went to local lenders, which received P455.9 billion in principal payments from the government. This was 85.7 percent higher year-on-year.

Meanwhile, the BTr paid P6.7 billion amortization it owed to foreign creditors, down by 15.7 percent.

In the first quarter, total principal payments jumped by 87.2 percent to P793 billion.

Interest payments up, too

Figures from the BTr also showed the government spent P71 billion in March to pay for interest costs, representing a 16.5-percent increase.

Broken down, the state paid P55.7 billion in borrowing costs to onshore creditors, up by 19.1 percent, while interest expense on foreign liabilities climbed 7.7 percent to P15.2 billion.

This lifted the three-month interest settlements by 35.9 percent to P193 billion.

Analysts have said the government could face more expensive borrowings amid a high interest rate environment that might stay for a longer period amid expectations of a delayed rate cut by the Bangko Sentral ng Pilipinas.

The Department of Finance (DOF) recently announced a bigger borrowing plan for this year at P2.57 trillion—from the old program of P2.46 trillion—as the government raises funds to plug a bigger-than-previously-expected budget hole of P1.5 trillion.

The larger borrowing plan in 2024 would put the debt-to-GDP ratio, a measure of the government’s ability to pay its debts, to 60.3 percent, still above the 60-percent threshold deemed manageable by credit rating agencies for emerging economies like the Philippines.

The debts are needed to bridge a fiscal deficit that is no longer expected to normalize to prepandemic level by the time President Marcos leaves office in 2028, as Finance Secretary Ralph Recto avoids new taxes. Moving forward, the DOF said the BTr developed a “strategic fundraising plan” that will continue to adopt a 75:25 borrowing mix in favor of domestic sources.