Debt service bill falls by 22% in Feb.

Luisa Maria Jacinta C. Jocson, Reporter

THE NATIONAL Government’s (NG) debt service bill fell by 21.9% in February due to a drop in amortization payments, the Bureau of the Treasury (BTr) said.

Data from the BTr showed that the NG’s debt service bill declined to P293.615 billion in February from P375.714 billion in the same month a year ago.

Month on month, debt repayments surged by 84.8% from P158.898 billion in January.

The bulk (83.7%) of the total debt service bill in February went to amortization.

Principal payments during the month slipped by 28% to P245.788 billion from P341.605 billion a year earlier.

Domestic debt payments stood at P243.625 billion in February, lower by 19.7% from P303.461 billion in the same month in 2023.

Amortization on foreign obligations plunged by 94.3% to P2.163 billion from P38.144 billion a year ago.

Meanwhile, interest payments climbed by 40.2% to P47.827 billion during the month from P34.109 billion a year ago.

Broken down, interest on local debt jumped by 56.7% year on year to P34.35 billion from P21.924 billion.

Domestic interest payments consisted of P21.676 billion in fixed-rate Treasury bonds, P7.734 billion in retail Treasury bonds, and P3.264 billion in Treasury bills.

Interest paid on foreign debt went up by 10.6% to P13.477 billion in February from P12.185 billion in the same month a year ago.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that the decline in debt payments was mainly due to the lower amount of maturing government securities in February compared with a year ago.

“Especially much larger Treasury bond maturities and principal payments a year ago, thereby resulting in a dramatic decline in the national debt servicing bill in February 2024,” he said in a Viber message.

“Payment of larger amount of principal payments a year ago also somewhat reduced interest payments for February 2024,” he added.

John Paolo R. Rivera, president and chief economist at Oikonomia Advisory & Research, Inc., said the annual drop in the debt service bill was also due to the weaker peso and wider fiscal deficit.

“This can be due to a mixture of several factors such as currency depreciation, lower amortization payments amidst higher interest payments, and greater funding requirements due to the persistent budget deficit,” he said in a Viber message. 

The peso depreciated to P56.20 as of end-February 2024, weakening by 87 centavos from its P55.33 close in end-February 2023.

Separate data from the BTr showed that the NG budget deficit widened by 54.81% to P164.7 billion in February from P106.4 billion a year earlier.

Meanwhile, the debt service bill in the first two months of the year rose by 6.8% to P452.513 billion from P423.545 billion in the same period a year ago.

The debt service bill consisted mainly of principal payments, accounting for more than three-fourths or 73% of the total.

In the January-February period, amortization payments slipped by 3.5% to P330.465 billion from P342.466 billion in 2023.

Principal payments made on domestic debt reached P243.763 billion, while payments for foreign obligations reached P86.702 billion during the period.

Meanwhile, total interest payments during the two-month period increased by 50.5% to P122.048 billion from P81.079 billion last year.

Foreign interest payments amounted to P38.875 billion in February.

In 2023, the NG’s debt service bill jumped to P1.604 trillion, up by 19% from P1.293 trillion in 2022.

Under the latest available Budget of Expenditures and Sources of Financing, the NG’s debt service program this year is set at P1.91 trillion.