Government settles 81 percent of debt service as of Q3

November 11, 2024 | 12:00am

MANILA, Philippines — The Marcos administration increased its debt payments to P1.6 trillion as of end-September, settling more than 80 percent of its programmed obligation for the year.

Data from the Bureau of the Treasury showed that the government raised its debt payments by 17 percent to P1.64 trillion in the nine-month period from the P1.4 trillion in the same period last year.

This means that as of the end of the third quarter, the government has settled 80.9 percent of its total debt service for 2024, which is at a record P2.03 trillion.

This is divided into a 77:23 mix in favor of domestic creditors.

During the period, 65 percent of the debt service was for amortization or the settlement of the principal amount at P1.06 trillion.

This is 13 percent above the P940.19 billion paid in the comparative period.

As such, the government has returned 84 percent of the P1.26 trillion worth of principal to comply with the amortization of debts programmed for 2024.

On the other hand, interest payments grew by 27 percent to P583.29 billion from P460.12 billion in the nine-month period of last year.

This is equivalent to 76 percent of the expected P763.44 billion spending earmarked for interest payments for 2024.

Spending on amortization goes to returning the loan principal, while interest payments go to complying with interest obligations.

For amortization, the bulk of the amount at 83 percent, amounting to P879.74 billion was remitted to domestic creditors.

The remaining P180.76 billion principal payments were made to foreign sources.

Further, more than 70 percent of the interest payments at P418.13 billion were issued to domestic creditors.

Broken down, the government paid the interest for P269.22 billion in fixed-rate Treasury bonds (T-bonds), P114.29 billion in retail T-bonds and P25.63 billion in Treasury bills (T-bills).

The Treasury sells government securities every week to generate funding for public programs and projects.

Short-dated T-bills have tenors of 91 days, 182 days and 364 days while long-term T-bonds have maturities of up to over 20 years.

Aside from payment to local lenders, the government settled P165.17 billion in interest owed to foreign financiers in the nine-month period.

As of end-September, the national debt rose to a record P15.89 trillion.