Gov’t debt service bill jumps by 33% in July

The National Government’s (NG) debt service bill increased by 33% in July as the government ramped up interest payments, the Bureau of the Treasury (BTr) reported.

The latest data from the BTr showed that the debt service bill went up to PHP 108.06 billion in July from PHP 81.17 billion in the same month last year.

Month on month, the debt service bill surged by 65.88% from PHP 65.14 billion in June.

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

The bulk or 98.3% of debt payments was made up of interest payments, BTr data showed.

Interest payments stood at P106.22 billion in July, up 33.72% from PHP 79.43 billion in the same month in 2024.

Domestic interest payments increased by 49.88% to PHP 82.92 billion in July from PHP 55.32 billion in the same month last year.

Broken down, PHP 73.61 billion was for fixed-rate Treasury bonds, PHP 3.89 billion for Treasury bills (T-bills), and PHP 3.58 billion for retail Treasury bonds.

Interest payments for foreign borrowings went down by 3.36% to PHP 23.3 billion in July from PHP 24.11 billion in the same month in 2024.

Meanwhile, amortization payments rose by 5.4% to PHP 1.84 billion in July from PHP 1.74 billion in July 2024.

Principal payments on foreign debt went up by 6.49% to PHP 1.66 billion in July from PHP 1.56 billion last year.

However, amortization paid on domestic debt slid by 3.78% to PHP 178 million in July from PHP 185 million a year ago.

“(The) higher debt servicing bill is largely a function of larger outstanding debt since the pandemic that entailed higher interest payments and also principal payment,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message over the weekend.

Last week, the NG debt stock ballooned to a fresh high of PHP 17.56 trillion as of the end-July, exceeding its projected PHP 17.36-trillion ceiling by end-2025.

Mr. Ricafort also attributed the higher debt service bill to borrowings that financed the wider budget deficit in recent months.

As of end-July, the fiscal gap widened by 22.04% to PHP 784.4 billion. This was on track to hit the revised PHP 1.56-trillion full-year deficit ceiling, the BTr said.

Seven-month period

In the seven-month period of 2025, the NG debt service bill stood at PHP 876.16 billion, down by 35.76% from PHP 1.36 trillion in the same period last year.

The seven-month tally was 42.65% of the PHP 2.05-trillion debt service program this year.

Amortization payments slumped by 60.86% to PHP 355.12 billion in the January-to-July period from PHP 907.3 billion. This was 29.44% of the PHP 1.21-trillion full-year amortization program.

Principal payments on domestic debt plunged by 77.48% to PHP 170.06 billion, while external payments increased by 23.25% to PHP 184.49 billion.

On the other hand, interest payments on external debt went up by 14.1% to PHP 521.04 billion in the January-to-July period from PHP 456.66 billion a year ago. This was 61.44% of the PHP 848.03-billion programmed interest payments for 2025.

Interest payments on domestic debt stood at PHP 382.74 billion, up by 18.36% from PHP 323.36 billion in 2024.

This was composed of PHP 267.29 billion in fixed-rate Treasury bonds, PHP 82.84 billion in retail Treasury bonds, and PHP 25.74 billion in T-bills.

On the other hand, external debt inched up by 3.75% to PHP 138.3 billion as of end-July from PHP 133.3 billion a year ago.

Mr. Ricafort said the government is still on track to meet its PHP 2.05-trillion debt service program, with around PHP 800 billion in maturing securities due in August and September.

“Wider budget deficits could also increase short-term NG borrowings and debt servicing for the rest of the year. However, the preference remains to use long-term borrowings to finance the budget deficit and to undertake new borrowings to hedge and manage maturing debts,” Mr. Ricafort said. — Aubrey Rose A. Inosante