Philippine government’s debt service bill surges in Nov.

The national government’s (NG) debt service bill surged year on year in November as both interest and amortization payments rose, data from the Bureau of the Treasury (BTr) showed.

The NG’s debt service bill soared by 65.3% to PHP 93.704 billion in November from PHP 56.674 billion in the same month a year ago.

Month on month, debt servicing fell by 56.8% from PHP 216.85 billion in October.

The debt service refers to payments made by the National Government on its domestic and foreign debt.

Interest payments accounted for the bulk or 71% of debt payments in November.

Data from the BTr showed interest payments jumped by 37.3% to PHP 66.653 billion in November from PHP 48.548 billion in the previous year.

Interest paid on local debt spiked by 38.8% to PHP 48.929 billion in November from PHP 35.257 billion in the same month in 2023.

Domestic interest payments were composed of PHP 29.512 billion in fixed-rate Treasury bonds, PHP 16.872 billion in retail Treasury bonds and PHP 2.017 billion in Treasury bills (T-bills).

Interest paid to foreign creditors rose by 33.4% year on year to PHP 17.724 billion in November from PHP 13.291 billion.

Treasury data showed amortization payments more than tripled (232.9%) to PHP 27.051 billion in November from PHP 8.126 billion in the same month last year.

Principal payments on domestic debt skyrocketed to PHP 18.297 billion from PHP 96 million in the year prior.

On the other hand, principal payments on external debt increased by 9% to PHP 8.754 billion from PHP 8.03 billion in 2023.

11-month debt service

In the January-November period, the NG debt service bill jumped by 27.3% to PHP 1.95 trillion from PHP 1.53 trillion in the same period last year.

Amortization payments climbed by 29.2% to PHP 1.25 trillion as of end-November from PHP 967.09 billion a year ago. It accounted for 63.9% of the overall debt service bill.

Broken down, principal payments on domestic debt stood at PHP 1.02 trillion, while external payments were recorded at PHP 230.973 billion.

Meanwhile, interest payments rose by 24.3% to PHP 705.334 billion in the 11-month period from PHP 567.655 billion a year ago.

Interest payments on domestic debt amounted to PHP 502.389 billion, while those on external debt stood at PHP 202.945 billion.

“The sharp year-on-year increase in the NG’s debt servicing bill could be attributed to higher debt maturities,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

He also cited relatively elevated interest rates and a weaker peso that drove up foreign debt payments.

The peso closed at PHP 58.62 against the greenback at the end of November, depreciating by 52 centavos from its PHP 58.1 finish as of end-October.

The local unit also fell to the record low PHP 59-a-dollar level twice during the month, on Nov. 21 and 26.

“This also reflected the wider NG budget deficit for the period that required more NG borrowings, especially some short-term borrowings such as Treasury bills,” he added.

Separate BTr data showed the budget gap more than doubled to PHP 213 billion in November from PHP 93.3 billion a year ago.

This brought the 11-month fiscal deficit to PHP 1.18 trillion, wider than the PHP 1.11-billion shortfall last year. It also represented 79.29% of the PHP 1.5-trillion deficit ceiling for 2024.

“NG debt increased sharply since the COVID-19 (coronavirus disease 2019) pandemic since 2020 and some of which already started to mature, thereby leading to higher debt servicing costs,” Mr. Ricafort added.

Latest data from the BTr showed the NG’s outstanding debt rose to a fresh high of PHP 16.09 trillion as of end-November.

The debt stock is expected to have reached PHP 16.06 trillion at the end of 2024 and to PHP 17.35 trillion for this year. — Luisa Maria Jacinta C. Jocson