GN Debt Payments Increase in September – Manila Bulletin

Payments on national government debt rose in October due to higher maturity obligations, data from the Treasury Office showed.

Debt service reached P27.19 billion in October this year, up eight percent compared to P25.5 billion in the same month last year, the Treasury office reported.

Interest expense, which represented 81 percent of total debt service during the month, increased 6.5 percent to P22.07 billion from P20.72 billion a year earlier.

Domestic interest payments increased 11 percent from P13.69 billion to P15.22 billion, while foreign interest expenses reached P6.85 billion, a 2.5 percent drop compared to P7. 03 billion in the same month of 2019.

Total amortization, meanwhile, jumped 14 percent to P5.12 billion from P4.48 billion last year. Of that amount, payments to local creditors decreased by 41 percent to P329 million from P564 million in the prior year.

Overseas amortization expense, on the other hand, increased 22 percent to P4.79 billion in October from P3.91 billion a year ago.

In the first 10 months of the year, the Duterte administration’s debt payments doubled from just P583.42 billion last year to P1.162 billion.

According to the Treasury report, this year’s total debt service increased due to the payment of P300 billion made to the Bangko Sentral ng Pilipinas (BSP) in September to pay off the national government loan for the coronavirus response.

In March, the national government borrowed P300 billion from BSP through a repurchase agreement with the Treasury.

Amortization expenses tripled from P268.95 billion to P826.86 billion at the end of October. “Advances to BSP” in September accounted for 36 percent of the total.

Interest payments, however, increased at a much slower rate of 6.5 percent to P335.04 billion from P314.46 billion in the prior year.

Previously, the Treasury reported that total national government loans in the first 10 months of the year reached P3.224 trillion, 233 percent more compared to P967.55 billion in the same period last year.

The government needed to borrow to cover its growing budget deficit due to declining revenues caused by the economic recession.

The Philippines is in recession this year after its economy slipped 11.5 percent in the third quarter, 16.9 percent in the second quarter and 0.7 percent in the first.

In the first three quarters of the year, the country’s gross domestic product contracted 10 percent.