Gov’t debt service bill climbs in May — BTr

The national government’s (NG) debt service bill climbed in May as it ramped up both principal and interest payments, data from the Bureau of the Treasury (BTr) showed.

Debt payments went up by 16.04% to PHP 80.05 billion in May from PHP 68.98 billion in the same month last year, latest Treasury data showed.

Month on month, however, the government’s debt service bill slumped by 71.5% from PHP 280.9 billion in April.

The bulk or 87.39% of debt payments in May was made up of interest payments, BTr data showed.

Interest payments stood at PHP 69.95 billion that month, rising by 14.5% from the PHP 61.1 billion recorded in the same month in 2024.

Broken down, interest paid for domestic debt went up by 13.54% to PHP 52.31 billion in May from PHP 46.07 billion in the same month last year.

Of this total, PHP 32.82 billion went to paying interest for fixed-rate Treasury bonds (T-bonds), PHP 16.87 billion for retail Treasury bonds (RTBs), and PHP 2.62 billion for Treasury bills (T-bills).

Meanwhile, interest payments for foreign borrowings increased by 17.42% to PHP 17.64 billion in May from PHP 15.03 billion a year prior.

On the other hand, amortization payments jumped by 28.04% year on year to PHP 10.09 billion in May from PHP 7.88 billion.

This came even as the government did not make any principal payments for domestic debt in May compared to the PHP 85 billion it spent in the same month a year ago.

Meanwhile, amortization paid on foreign debt increased by 29.43% to PHP 10.09 billion from PHP 7.8 billion in the same month in 2024.

“NG debt servicing increased year on year for the month of May 2025 partly due to higher matured government securities versus a year ago,” Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said in a Viber message.

He added that still-elevated rates likely contributed to the higher interest payments that month.

“The maturity of T-bills, which saw high demand in the previous months, were the primary drivers for this month’s debt payments,” Reinielle Matt M. Erece, an economist at Oikonomia Advisory and Research, Inc., added.

The government has seen strong demand for its T-bill offerings in recent months as lingering uncertainty and global market volatility has caused investors to prefer short-term debt instruments.

First five months

Meanwhile, from January to May, the NG debt service bill stood at PHP 702.97 billion, slumping 42.22% from PHP 1.22 trillion in the same period last year.

Amortization payments stood at PHP 345.57 billion in the first five months, a 61.39% decline from PHP 895.13 billion in the comparable year-ago period.

This made up 50.84% of the five-month tally.

Broken down, principal payments on domestic debt sharply dropped by 77.43% to PHP 170.4 billion in the period from PHP 754.86 billion a year earlier.

In contrast, amortization for foreign borrowings climbed by 24.88% year on year to PHP 175.16 billion in the January-to-May period from PHP 140.27 billion.

Meanwhile, the government’s interest payments rose by 11.14% to PHP 357.4 billion in the period from PHP 321.59 billion a year ago.

Interest payments on domestic went down by 12.95% to PHP 261.34 billion in the first five months from PHP 231.38 billion previously. This was composed of PHP 178.94 billion in interest payments for fixed-rate T-bonds, PHP 60.08 billion for RTBs, PHP 18.7 billion for T-bills, and PHP 3.63 billion for other instruments.

Meanwhile, interest paid for external debt went up by 6.48% year on year to PHP 96.06 billion in the first five months from PHP 90.21 billion.

Mr. Ricafort said principal payments could increase in the coming months amid large maturities of T-bonds and RTBs, especially in August and September.

Still, the Bangko Sentral ng Pilipinas’ cumulative cuts since August 2024 worth 125 basis points and the relative strength of the peso against a struggling dollar could help reduce debt servicing costs, he said.

“We may continue to see higher debt payments as Philippine securities are becoming more attractive driven by better macroeconomic conditions and better credit rating, as well as government efforts to reduce the country’s debt,” Mr. Erece added.

For this year, the government’s debt service program is set at PHP 2.051 trillion, consisting of PHP 1.203 trillion in principal payments and P848.031 billion in interest payments, based on the 2025 Budget of Expenditures and Sources of Financing.

The NG debt stock hit a fresh high of PHP 16.92 trillion as of end-May. It is projected to hit PHP 17.35 trillion by yearend. — Aubrey Rose A. Inosante