Economy 3 MIN READ

Debt service bill hits PHP 1.3 trillion in 2022

March 19, 2023By BusinessWorld

THE NATIONAL Government’s (NG) debt service bill rose to PHP 1.293 trillion in 2022, as amortization payments increased, data from the Bureau of the Treasury (BTr) showed.

BTr data showed the government’s debt payments jumped by 7.4% from the PHP 1.204 trillion posted in 2021.

However, this was slightly below the PHP 1.298-trillion debt service program for the year.

Treasury data showed amortization payments inched up by 2.02% to PHP 790.319 billion in 2022, from PHP 774.637 billion a year ago. It is a tad higher than the PHP 785-billion program for the year.

Amortization payments accounted for 63.8% of the total debt service bill for the year, while the rest went to interest payments.

Broken down, principal payments to domestic lenders rose by 22.8% to PHP 659.834 billion in 2022 from PHP 537.45 billion in 2021.

The government’s payments to external creditors fell by 45% to PHP 130.485 billion from PHP 237.187 billion in 2021.

Meanwhile, interest payments jumped by 17% to P502.858 billion last year from the PHP 429.432 billion in 2021. This was nearly 2% below the PHP 512.59-billion program for the year.

Interest payments on domestic debt went up by 15% to PHP 383.452 billion. This consisted of PHP 12.647 billion in Treasury bills, PHP 231.138 billion in fixed-rate Treasury bonds, and PHP 135.498 billion in retail Treasury bonds.

The Treasury sells government securities weekly to generate funds for the NG’s projects and programs.

Interest paid on external debt rose by 24.3% to PHP 119.406 billion.

In December alone, the debt service bill surged by 332% to PHP 302.125 billion from PHP 69.989 billion in the same month a year ago.

Data from the Treasury showed amortization payments surged by 506% to PHP 258.52 billion from PHP 42.662 billion in the previous year. Amortization payments accounted for 86% of the total debt service bill during the month.

Principal payments to local lenders soared by 590% to PHP 250.793 billion, while the BTr settled PHP 7.727 billion with foreign creditors, up by 22.6% year on year.

Meanwhile, interest payments in December hit PHP 43.605 billion, up by 59.6% from the PHP 27.327 billion in the same month in 2021.

Interest paid on domestic debt went up by 49.9% to PHP 36.251 billion year on year.

Broken down, the government paid interest for PHP 763 million in Treasury bills, PHP 6.613 billion in fixed-rate Treasury bonds, and PHP 27.923 billion in retail Treasury bonds.

On the other hand, interest paid on foreign debt jumped by 133.9% to PHP 7.354 billion in December.

In 2022, NG gross borrowings stood at PHP 2.16 trillion, 16% lower year on year.

The government plans to borrow PHP 2.207 trillion this year to fund a budget deficit capped at 6.1% of gross domestic product (GDP).

The country’s outstanding debt hit a record high of PHP 13.698 trillion at the end of January. As of end-December, the country’s debt-to-GDP ratio stood at 60.9%. — Luisa Maria Jacinta C. Jocson

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