MANILA, Philippines — The government ramped up its debt payments to P1.28 trillion in the first semester, with the bulk going to amortization to domestic lenders.
Data from the Bureau of the Treasury showed that the Marcos administration increased its debt payments by 41 percent to P1.28 trillion in January to June from P907.93 billion in the same period last year.
About 70 percent of the debt service was for amortization or the settlement of the principal amount at P905.56 billion.
This is a 45-percent increase from the P625.47 billion paid in the comparative period a year earlier.
On the other hand, interest payments went up by 34 percent to P377.23 billion from P282.46 billion in the first half last year.
Spending on amortization goes to returning the loan principal, while interest payments go to complying with interest obligations.
For amortization, the bulk at 84 percent amounting to P757.43 billion was remitted to domestic creditors.
The remaining P148.13 billion principal payments were made to foreign sources.
Further, a little over 70 percent of the interest payments at P268.04 billion were issued to domestic creditors.
Broken down, the government paid the interest for P170.5 billion in fixed-rate Treasury bonds (T-bonds), P74.66 billion in retail T-bonds and P15.78 billion in Treasury bills (T-bills).
The Treasury sells government securities every week to generate funding for public programs and projects. Short-dated T-bills have tenors of 91 days, 182 days and 364 days while long-term T-bonds have maturities of up to over 20 years.
Aside from payment to local lenders, the government settled P109.19 billion in interest owed to foreign financiers in the first half.
As of end-June, the government has settled 63 percent of its total debt service for 2024 which is at a record P2.03 trillion.
This is divided into a 77:23 mix in favor of domestic creditors.
The government intends to spend P763.44 billion for interest payments and return P1.26 trillion worth of principal to comply with the amortization of debts mostly to local lenders as well.
Currently, the country’s outstanding debt is at a record P15.48 trillion as of end-June.
For next year, the government targets to settle a record P2.05 trillion in debts, divided into P848.03 billion for interest payments and P1.2 trillion for principal amortization.
This will just be a percentage higher from the target P2.03 trillion debt service for 2024.