The cost of servicing government debt ballooned in the first seven months due to a high-interest rate environment and the expansion of domestic debt, data from the Bureau of the Treasury (BTr) showed.
The government settled P81.17 billion of its obligations in July, up by 26.1 percent from the P64.36 billion paid to creditors a year ago.
This caused a 40.2-percent surge in payments for the first seven months to P1.36 trillion from P972.29 billion in the same period last year.
Debt service refers to the money required to cover the payment of interest and principal on loans.
In July, 97.9 percent of government debt servicing consisted of interest payments.
“This surge, driven largely by domestic debt, signals growing fiscal pressure and underscores the need for robust economic growth and prudent debt management to ensure long-term sustainability,” said Robert Dan Roces, chief economist at Security Bank.
In a separate interview, Rizal Commercial Banking Corp. chief economist Michael Ricafort attributed the increase to higher debt maturities.
Ricafort said that debt repayment would be influenced by the timing of debt maturities, and whether the US Federal Reserve and Bangko Sentral ng Pilipinas would lower interest rates.
The Philippine government’s interest payments in the January to July period climbed by 32 percent to P456.66 billion from P346 billion last year. Broken down, interest paid on domestic liabilities reached P323.36 billion while interest payment for external debt stood at P133.3 billion.
Meanwhile, amortization of debt, which made up 2.1 percent of the total amount, surged by 115.6 percent to P1.74 billion in July. Year to date, it went up by 44.9 percent to P907.3 billion.
Amortization of domestic debt stood at P757.62 billion and external debt, at P149.68 billion, in the first seven months. INQ