Debt service bill declines 24% in November

The National Government’s (NG) debt service bill fell 24.4% year-on-year in November following a large principal payment to foreign creditors.

According to preliminary data from the Bureau of the Treasury (BTr) the government paid P61.389 billion to service its debt against P81.239 billion ia year earlier.

Month-on-month, debt payments rose 54.2% from P39.817 billion in October.

Principal payments to foreign creditors surged 404.9% during the month to P35.089 billion. The BTr settled P208 million with domestic lenders, down 99.5% from a year earlier.

In November, 57.5% of the debt service bill went to amortization, while the rest went to interest payments.

Interest payments fell 16.4% year-on-year to P26.092 billion in November.

Interest paid on domestic debt fell 32.5% to P18.584 billion while foreign debt more than doubled or rose by 104.3% to P7.508 billion from P3.675 billion.

Domestic debt consisted of P10.202 billion in fixed-rate Treasury bonds, P7.618 billion in retail Treasury bonds, and P743 million in Treasury bills.

In the first 11 months, the debt service bill declined 12.3% to P991.052 billion, with amortization taking up 53.7% of the total.

Principal payments during the 11-month period totaled P531.799 billion, falling 27.3% from a year earlier. These included P409.041 billion in domestic debt and P122.758 billion in foreign debt payments.

Interest payments rose 14.2% to P459.253 billion a year earlier. This consisted of P347.201 billion worth of payments to domestic creditors and P112.052 billion to foreign creditors.

This year, the government plans to borrow from external and domestic sources to fund a budget deficit capped at 6.1% of gross domestic product (GDP).

The government will allocate P1.6 trillion on debt payments for 2023, with P1.353 trillion set aside for domestic debt and the remainder for foreign debt.

At the end of November, the National Government’s outstanding debt rose to record P13.644 trillion.

The debt-to-GDP ratio was 63.7% at the end of September, the highest debt-to-GDP ratio in 17 years.

It is also remains above the 60% threshold considered manageable by sovereign debt lenders.

For 2023, the government is aiming to bring down the debt-to-GDP ratio to 60-62%. – Luisa Maria Jacinta C. Jocson