July debt service bill rises to P156B

By on September 11, 2022 0

THE NATIONAL GOVERNMENT saw its debt service bill more than double in July from a year ago as amortization payments increased.

Preliminary data from the Bureau of the Treasury (BTr) showed the government paid 156.2 billion pesos for debt service in July, up 158% from 60.54 billion pesos in the same month it a year ago.

On a month-to-month basis, debt payments tripled from 44.29 billion pesos in June.

In July, about 66.65% of debt repayments went to amortization, while the rest went to interest, BTr said.

Overall amortization payments jumped 6,789.94% to P104.11 billion in July from P1.5 billion in the same month last year.

BTr settled 103.46 billion pesos with domestic lenders, while principal payments to foreign creditors amounted to 647 million pesos.

Interest payments fell 11.75% year-on-year to 52.09 billion pesos in July, as interest paid on domestic debt fell 12.09% year-on-year to 32, 42 billion pesos. These were P27.9 billion for treasury bills, P3.58 billion for retail treasury bills and P567 million for treasury bills.

Interest paid on foreign debt fell 11.18% to 19.67 billion pesos in July.

For the seven-month period, the debt service bill fell by 26.33% year-on-year to P614.55 billion, of which about 50.33% is spent on interest payments and the rest on debt. ‘amortization.

Principal payments from January to July amounted to 305.25 billion pesos, down 46.13% from the previous year. These were 256.84 billion pesos of domestic debt and 48.41 billion pesos of foreign bonds.

Interest payments jumped 15.6% to 309.31 billion pesos in the seven months to July. These included P238.11 billion in payments to domestic creditors and P71.2 billion to external creditors.

The government borrows from foreign and local sources to fund its budget deficit, as it spends more than the revenue it generates to support programs that would spur economic growth.

The government wants to borrow 2.47 trillion pula to help finance its budget forIfcit this year, with the aim of sourcing 75% nationally.

The national government took on 1.2 trillion pesos in gross borrowing at the end of July, down 41.82% year on year, according to BTr data.

Outstanding debt is expected to reach 13.43 trillion pesos by the end of 2022, up from 12.89 trillion pesos recorded at the end of July, with additional borrowings estimated at 2.73 trillion pesos and principal repayments to 1.27 trillion pesos this year.

The government plans to spend 1,298 billion pesos on debt repayment this year, with 785.21 billion pesos budgeted for principal and the remaining 512.59 billion pesos for interest.

The Philippines recorded a debt-to-gross domestic product (GDP) ratio of 62.1% in the second quarter, higher than the 60% debt-to-GDP ratio considered manageable by multilateral lenders for developing economies despite falling by 63, 5% at the end of the first quarter.

The government estimates that the debt-to-GDP ratio will fall to 61.8% by the end of the year.

Fitch Ratings maintained the country’s “BBB” rating in February, but kept the “negative” outlook because it flmedium-term growth uncertainties and obstacles to debt reduction. A “negative” outlook means that a downgrade is possible within the next 12 to 18 months.

S&P Global Ratings Last Oneffiupgraded the Philippines to “BBB+” rating with a “stable” outlook in May 2021. Meanwhile, Moody’s hasffiupgraded its “Baa2” credit rating with a “stable” outlook for the Philippines in July 2020. — Diego Gabriel C.Robles