PH saddled with high interest payments

The country is paying more for interest on debts, specifically P723.2 billion from January to October this year, accounting for 37.4 percent of debt service.

The  Bureau of the Treasury (BTr) said  debt payments increased during the first ten months of the year, driven by a double-digit jump in interest payments to domestic and foreign lenders.

The government’s debt payments grew by four percent to ₱1.93 trillion in the first 10 months of the year, from ₱1.86 trillion in the same period last year, even after a sharp decline in October settlements.

By comparison, interest payments last year totaled only  ₱638.7 billion. Domestic lenders received ₱536.2 billion in interest payments since January, an 18.2 percent rise from ₱453.5 billion a year ago.

The interest burden on government securities rose across the board, with fixed-rate Treasury Bonds (T-bonds) rising to ₱367.1 billion from ₱296.5 billion, Retail Treasury Bonds (RTBs) edging up to ₱122.5 billion from ₱117.9 billion, and Treasury Bills (T-bills) climbing to ₱38.2 billion from ₱28.4 billion a year earlier. Interest payments on the government’s other domestic obligations were lower as of end-October, at ₱8.4 billion from ₱10.7 billion a year earlier.

Interest payments on external obligations also inched up by 3.8 percent to ₱171.5 billion from ₱165.2 billion. A separate report showed a one percent increase to ₱187 billion from ₱185.2 billion.

Amortization, which made up 62.6 percent of the total, slightly decreased by 0.8 percent to ₱1.21 trillion as of end-October, from ₱1.22 trillion a year earlier. The government cut amortization to foreign lenders by 8.9 percent to ₱202.4 billion from ₱222.2 billion.

Meanwhile, amortization to domestic lenders scaled up to ₱1 trillion during the period from ₱999.7 billion in the same period last year.

Total debt payments in October alone plunged 69.7 percent year-on-year to ₱65.8 billion from ₱216.9 billion in the same month last year. Amortization during the month dropped significantly by 94.8 percent to ₱8.4 billion from the ₱161.5 billion the government settled in October 2024. The decline in amortization was not offset by interest payments, which only increased by 3.6 percent to ₱57.4 billion from ₱55.4 billion a year ago.

As of end-October, the national government’s outstanding debt nearly exceeded the historic high of ₱17.563 trillion posted in July, a result of the government’s increased borrowing from both local and foreign lenders.

The weak peso also contributed to the problem of borrowing.