Debt service bill jumps in May
THE NATIONAL GOVERNMENT’S (NG) debt service bill jumped year on year in May due to a surge in interest payments, the Bureau of the Treasury (BTr) said.
Data from the Treasury bureau showed that debt payments rose by 40.64% to P68.98 billion in May from P49.05 billion in the same month a year ago.
Month on month, debt payments dropped by 57.34% from P161.7 billion in April.
The debt service refers to payments made by the government on its domestic and foreign debt.
The bulk (88.57%) of May’s debt service bill went to interest payments.
Interest payments went up by 47.78% to P61.1 billion in May from P41.34 billion in the same month a year ago.
Interest paid on domestic debt increased by 56% to P46.07 billion from P29.53 billion a year ago.
Meanwhile, interest payments to foreign creditors grew by 27.18% to P15.03 billion in May from P11.82 billion a year ago.
On the other hand, principal payments inched up by 2.34% to P7.88 billion from P7.7 billion last year.
Month on month, amortization plunged by 92% from P94.2 billion in April.
Broken down, amortization on domestic debt in May dropped by 96.8% to P85 million from P2.66 billion a year ago.
Principal payments on external debt increased by 54.51% to P7.8 billion in May from P5.05 billion last year.
FIVE MONTHS
In the first five months of the year, the NG’s debt service bill increased by 48% to P1.22 trillion from P819.53 billion in the year-ago period.
Amortization payments climbed by 51.73% to P895.13 billion in the first five months from P589.95 billion a year ago.
Principal payments on domestic debt reached P754.86 billion, while those on external debt amounted to P140.27 billion.
Meanwhile, interest payments in the January-to-May period jumped by 40.08% to P321.59 billion from P229.57 billion a year prior.
Broken down, interest paid on domestic debt stood at P231.38 billion, while interest payments for external debt reached P90.21 billion.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the higher debt payments in May could be due to the elevated interest rates and weaker peso.
“The higher debt servicing bill of the NG could be attributed to higher interest rates that increased borrowing costs/financing costs,” he said via Facebook Messenger.
Mr. Ricafort said the weaker peso exchange rate increased the peso equivalent of external debt and debt servicing.
The peso closed at P58.52 against the dollar as of end-May, depreciating by P0.94 from its P57.58 finish as of end-April.
The Bangko Sentral ng Pilipinas has kept the key policy rate at an over 17-year high of 6.5% since October 2023.
The higher debt payments could also reflect the wider budget deficit, Mr. Ricafort said.
The NG’s budget deficit in May widened 43.1% to P174.9 billion amid strong spending over revenues, BTr said. In the first five months of the year, the budget gap ballooned by 24.06% to P404.8 billion from P326.3 billion a year ago.
“There could also be some payment of some multilateral foreign debts, as well as some maturity of some local government securities/debts,” Mr. Ricafort said.
As of end-May, the NG’s debt hit a record high P15.35 trillion, with P10.44 trillion coming from domestic sources and P4.9 trillion from foreign sources. — Beatriz Marie D. Cruz