Debt service bill declines by 21% in April — Treasury

The National Government’s (NG) debt service bill fell in April amid a drop in amortization payments, the Bureau of the Treasury (BTr) said.

Data from the BTr showed that debt repayments declined by 21% to PHP 161.695 billion in April from PHP 204.763 billion in the same month a year ago.

Month on month, the debt service bill plunged by 69.7% from PHP 533.523 billion in March.

More than half (58.3%) of debt servicing during the month went to amortization.

Principal payments in April dropped by 40.6% to PHP 94.199 billion from PHP 158.51 billion in the same month a year ago.

Domestic debt payments slumped by 64.2% to PHP 55.097 billion in April from PHP 153.959 billion a year ago.

On the other hand, amortization on foreign obligations shot up (759.2%) to PHP 39.102 billion from PHP 4.551 billion.

Meanwhile, interest payments stood at P67.496 billion in April, 45.9% higher than P46.253 billion in the same month in 2023.

Broken down, interest on local debt jumped by 67.3% to PHP 46.427 billion in April from PHP 27.75 billion a year ago.

This consisted of PHP 38.437 billion in fixed-rate Treasury bonds, PHP 3.575 billion in retail Treasury bonds, and PHP 2.703 billion in Treasury bills.

Interest paid on foreign debt went up by 13.9% to PHP 21.069 billion in April from PHp 18.503 billion a year ago.

FOUR-MONTH DEBT SERVICE
Meanwhile, the NG’s debt service bill rose by 49% to PHP 1.15 trillion in the first four months from PHP 770.479 billion in the same period a year ago.

Payments for amortization climbed by 52.4% to PHP 887.243 billion as of end-April from PHP 582.249 billion a year ago.

Principal payments on domestic debt were recorded at PHP 754.77 billion, while those on external debt stood at PHP 132.473 billion.

Meanwhile, interest payments rose by 38.4% to PHP 260.488 billion in the January-April period from PHP 188.23 billion.

Broken down, interest paid on domestic debt reached PHP 185.305 billion, while interest payments for external debt amounted to PHP 75.183 billion.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that the NG debt service bill in April declined due to lower debt maturities paid for both principal and interest payments.

Debt payments fell despite elevated interest rates that drove up borrowing costs as well as a weaker peso that increased the peso equivalent of foreign debt, he added.

In May, the Monetary Board kept its key policy rate steady at a 17-year high of 6.5% for a fifth straight meeting.

The central bank has raised borrowing costs by a cumulative 450 basis points (bps) from May 2022 to October 2023.

On April 16, the peso fell to the PHP 57-per-dollar level for the first time since November 2022. This was also its worst close in 17 months at the time.

Separate data from the BTr showed that the NG’s outstanding debt rose by 0.61% to PHP 15.02 trillion as of end-April from a month earlier, mainly due to peso depreciation

As of the first quarter, the debt-to-gross domestic product (GDP) ratio stood at 60.2%.

The government set its debt-to-GDP ratio target at 60.3% this year. It is aiming to bring this down further to 55.9% by 2028. — Luisa Maria Jacinta C. Jocson