Bureau of the Treasury
The servicing of government debt declined year-on-year in June as bulk of payments went to interest liabilities, data from the Bureau of the Treasury (BTr) showed.
The government settled P66.08 billion of its obligations in June, falling by 25.3 percent from the P88.4 billion it paid to creditors a year ago, figures showed.
This pushed up the first-semester payments for liabilities grew by 41.3 percent to P1.28 trillion from P907.93 billion in the same period last year. This accounts for 63.1 percent of the government’s P2.03-trillion debt service plan for this year.
Debt service refers to the money required to cover the payment of interest and principal on a loan for a period.
In June, 84.2 percent of debt servicing consisted of interest payments.
The government is allocating P2.05 trillion for its debt servicing program next year, with P848.03 billion designated for interest payments.
Earlier, Finance Secretary Ralph Recto said that he expects the growth in interest payments to moderate as the Monetary Board is anticipated to begin cutting policy rates.
However, Bangko Sentral ng Pilipinas Governor Eli Remolona Jr. hinted last week that the widely expected rate cut in August is now a “little less likely” given the higher inflation.
Interest payments in the first semester climbed by 33.6 percent to P377.23 billion from P282.46 billion last year. Broken down, interest paid on domestic liabilities reached P268.04 billion while interest payments for external debt stood at P109.88 billion.
Meanwhile, amortization payments, which made up 15.8 percent of the total amount, surged by 44.8 percent to P905.56 billion in the first half. In the comparative period last year, this amounted to P625. 47 billion.
Also, payments on domestic debt stood at P757.43 billion, while those on external debt amounted to P148.13 billion.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp. attributed the lower debt payments due to lower amount of debt maturities in June compared last year.
“For the coming months, most of the remaining months of the year would have lower maturity of government securities such as Treasury bills and Treasury bonds compared to a year ago levels,” Ricafort said. INQ