NG’s debt service bill drops 25% in June

By means of Beatriz Marie D. Cruz, Reporter

THE NATIONAL GOVERNMENT (NG) debt service fell 25.25% in June as principal payments fell, the Bureau of the Treasury (BTr) said.

BTr data showed NG debt repayments fell to P66.08 billion in June from P88.4 billion in the same month a year ago.

Month-on-month, debt service also declined by 4.21%, compared to P68.98 billion in May.

Debt service refers to payments made by the national government on its domestic and foreign debts.

The largest share, or 84.21% of the total debt service in June, went to interest payments.

BTR data showed that interest payments for the month rose 5.22% to P55.64 billion in June from P52.88 billion a year ago.

Broken down, interest on local debt fell 8.98% year-on-year to P36.66 billion.

Domestic interest payments amounted to P13.84 billion FFixed-rate government bonds, P19.18 billion in retail government bonds (T-bonds), P2.3 billion in government bonds (T-bills) and others (P1.34 billion).

Foreign bond yields rose 50.58% to P18.98 billion in June from P12.6 billion in the same month a year ago.

On the other hand, depreciation during the month fell 70.63% to P10.43 billion from P35.52 billion a year earlier.

Domestic repayments fell 90.79% to P2.58 billion in June from P27.98 billion in the same month in 2023.

External debt write-offs rose 4.23% to P7.86 billion in June from P7.54 billion a year ago.

The lower annualized debt repayments may be related to the depreciation of the peso and higher financing needs amid a “persistent” fiscal deficit, John Paolo R. Rivera, Senior Research Fellow of the Philippine Institute for Development Studies, said in a Viber message.

“It may also be due to the reallocation of funds to finance areas that require attention, such as the recovery after the dry spell and other calamities that struck in June,” he added.

The NG’s budget deficit fell 7.24% to 209.1 billion euros in June, compared to 225.4 billion euros a year ago, the BTr said.

FIRST HALF BILL
Meanwhile, the debt service law is in the FThe first half of the year rose 41.29% to P1.28 trillion from P907.93 billion in the same period a year ago.

Principal payments accounted for more than 70.59% of the total in the Ffirst half.

In the January to June period, depreciation payments rose 44.78% to P905.56 billion, up from P625.47 billion in 2023.

Domestic debt repayments reached P757.43 billion during the period, while foreign obligation payments reached P148.13 billion during the period.

Meanwhile, total interest payments during the FThe first six months increased 33.55% to P377.23 billion from P282.46 billion last year.

Foreign interest payments in the Ffirst six months was P109.19 billion, while domestic interest payments amounted to P268.04 billion.

In the FIn the first half, interest payments to the domestic market amounted to P170.5 billion FFixed-rate government bonds, P74.66 billion in retail government bonds, P15.78 billion in government bonds, and others at P8 billion.

In a Viber call, Michael L. Ricafort, chief economist of Rizal Commercial Banking Corp., said debt service could decline in the coming months due to lower treasury bond maturities for the rest of the year.

The NG plans to borrow P630 billion from the domestic market in the third quarter.

Broken down, the BTR aims to raise P260 billion through government bonds and P370 billion through government bonds during the period.

NG debt rose from P15.35 trillion at the end of May to a new high of P15.48 trillion at the end of June.

According to the latest spending and financing budget, the debt service program for this year is set at P2.03 trillion.