NG debt service bill soars in April

The National Government’s (NG) debt service bill sharply increased year on year in April as amortization payments more than doubled, the Bureau of the Treasury (BTr) reported.

Data from BTr showed that the debt service bill went up by 73.72% to PHP 280.9 billion in April from P161.7 billion in the same month last year.

Month on month, the debt service bill also rose by 53.2% from P183.36 billion in March.

Debt service refers to the payments made by the government on domestic and foreign borrowings.

In April, amortization payments stood at PHP 234.45 billion, up 148.89% from PHP P94.2 billion in the same month in 2024.

The bulk of debt payments in April were made up of amortization payments, BTr data showed.

Principal payments on domestic debt surged by 208.23% to PHP 169.83 billion in April from PHP 55.1 billion a year ago.

Amortization paid on foreign debt increased by 65.27% to PHP 64.63 billion in April from PHP 39.1 billion in April 2024.

Meanwhile, interest payments slid by 31.19% to PHP 46.45 billion from PHP 67.5 billion a year earlier.

Domestic interest payments went down by 34.37% to PHP 30.47 billion in April from PHP 46.43 billion in the same month last year.

This was composed of PHP 21.3 billion in fixed-rate Treasury bonds, PHP 3.84 billion in Treasury bills (T-bills), and PHP P3.58 billion in retail Treasury bonds and others (P1.76 billion).

Interest payments for foreign borrowings dropped by 24.17% to PHP 15.98 billion in April from PHP 21.07 billion a year prior.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the increase in debt servicing was primarily due to the PHP 140-billion Treasury bond payments in early April.

“However, there would be relatively large NG debt/Treasury bond maturities from August-September 2025 that could be principal payments that need to be paid by then,” Mr. Ricafort said in a Viber Message.

Mr. Ricafort also said the rate cuts from the Bangko Sentral ng Pilipinas and the US Federal Reserve from the latter part of 2024 may have also partly helped in reducing NG interest payments.

YEAR TO DATE
Meanwhile, for the first four months of the year, the NG debt service bill stood at PHP 622.92 billion, a 45.73% decline from PHP 1.15 trillion in the same period last year.

Amortization payments slumped by 62.19% to PHP 335.47 billion in the January-to-April period from PHP 887.24 billion. This accounted for 53.85% of the four-month tally.

Amortization payments on domestic debt fell by 77.42% to PHP 170.4 billion, while external payments increased by 24.61% to PHP 165.07 billion.

Meanwhile, interest payments rose by 10.35% to PHP 287.45 billion in the January-to-April period from PHP 260.49 billion in the same period a year ago.

Interest payments on domestic debt stood at PHP 209.03 billion, 12.8% higher annually from PHP 185.31 billion in 2024.

This was composed of PHP 146.13 billion in fixed-rate Treasury bonds, PHP 43.21 billion in retail Treasury bonds, PHP 16.08 billion in Treasury bills (T-bills), and others (PHP 3.63 billion).

On the other hand, external debt inched up by 4.3% to PHP 78.42 billion in the first four months from PHP 75.18 billion a year ago.

“The maturity of government securities caused the uptick in debt payments for the government, specifically government bonds,” Reinielle Matt M. Erece, an economist at Oikonomia Advisory and Research, Inc., said in a Viber message.

Mr. Erece said he expects debt payments to rise in the coming months.

“The government debt service bill may continue to increase in the next few months as government securities saw high demand mature. In addition, the long-term fiscal consolidation plan of the government can also explain elevated debt payments to try and reduce the country’s debt burden,” he said.

In 2025, the debt service program is set at PHP 2.051 trillion, consisting of PHP 1.203 trillion in principal payments and PHP P848.031 billion in interest payments.

The NG debt stock registered a fresh high of PHP 16.75 trillion as of the end-April. It is projected to hit PHP 17.35 trillion by yearend.

The debt-to-gross domestic product (GDP) ratio rose to 62% as of end-March — the highest in 20 years.

“The country remains firmly on track to reduce the NG debt-to-GDP ratio to below 60% by the end of the President’s term,” the Department of Finance said last week. — A.R.A. Inosante