Gov’t debt service burden drops

Government debt service swung sharply lower in October as principal payments collapsed, offsetting the slight rise in interest expenses.

According to the latest cash operations report of the Bureau of the Treasury, the Marcos administration paid a total of P65.78 billion to domestic and foreign creditors in October, plunging by nearly 70 percent from the same month last year.

This brought the 10-month government debt service to P1.93 trillion, already 91 percent of the P2.1 trillion planned debt payments for 2025.

Driving the sharp decline in October was amortization, or principal payments, which plummeted 95 percent to P8.41 billion from P161.46 billion a year earlier. Year-to-date, amortization has reached P1.2 trillion, just 0.8 percent lower than the comparable period in 2024.

Amortization accounted for 13 percent of October’s total debt service pile.

Broken down, the government settled only P2.48 billion with domestic lenders, a steep drop from the P120 billion paid a year ago. Still, domestic amortization from January to October stood at P1 trillion, nearly unchanged from last year.

Payments to foreign creditors also fell sharply to P5.9 billion, compared with P41.46 billion in October 2024. This brought year-to-date foreign amortization to P202.4 billion, down from P239.3 billion in the same period last year.

Meanwhile, the rest of the debt service went to interest payments, which saw an uptick in October but were offset by the steep drop in amortizations. The government paid P57.36 billion in interest, up 3.5 percent from P55.38 billion last year.

Since the beginning of the year, the state has spent P723.21 billion on interest payments, marking a 13-percent increase from the P638.68 billion recorded in the same period last year.—Nyah Genelle C. De Leon INQ