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The debt service bill drops 22% in February.



The debt service bill drops 22% in February.

By means of Luisa Maria Jacinta C. Jocson, News reporter

The National Government’s (NG) debt service fell 21.9% in February due to a decline in debt service payments, the Bureau of the Treasury (BTr) said.

Data from the BTr showed that NG’s debt service fell to P293.615 billion in February from P375.714 billion in the same month a year ago.

Month-on-month, debt repayments rose 84.8%, compared to P158.898 billion in January.

The majority (83.7%) of total debt service in February went to repayments.

Principal payments fell 28% to P245.788 billion during the month, compared to P341.605 billion a year earlier.

Domestic debt burdens amounted to 243.625 billion euros in February, 19.7% lower than 303.461 billion euros in the same month in 2023.

Write-downs on foreign bonds fell 94.3% to P2.163 billion from P38.144 billion a year ago.

Meanwhile, interest payments rose 40.2% to P47.827 billion this month from P34.109 billion a year ago.

Broken down, interest on local debt rose 56.7% year-on-year from P21.924 billion to P34.35 billion.

Domestic interest payments consisted of P21.676 billion in fixed-rate government bonds, P7.734 billion in retail government bonds and P3.264 billion in government bonds.

Interest on foreign debt rose 10.6% to P13.477 billion in February from P12.185 billion in the same month a year ago.

Michael L. Ricafort, chief economist of Rizal Commercial Banking Corp., said the decline in debt payments was mainly due to the lower amount of maturing government bonds in February compared to a year ago.

“Especially the much larger government bond maturities and principal repayments a year ago, which resulted in a dramatic fall in government debt in February 2024,” he said in a Viber message.

“The payment of a larger amount of principal a year ago also resulted in a slightly lower interest payment for February 2024,” he added.

John Paolo R. Rivera, president and chief economist at Oikonomia Advisory & Research, Inc., said the annual decline in debt service was also due to to the weaker peso and wider Fiscal deFicit.

“This may be due to a combination of several factors, such as the depreciation of the currency, lower principal payments amid higher interest payments and increased financing needs due to ongoing budget deficits.Ficit,” he said in a Viber message.

The peso devalued to P56.20 at end-February 2024, weakening by 87 centavos from P55.33 at end-February 2023.

Separate data from the BTR showed that the NG budget was theFInterest rates rose 54.81% to P164.7 billion in February from P106.4 billion a year earlier.

Meanwhile, the debt service law is in the FThe first two months of the year rose 6.8% to P452.513 billion, compared to P423.545 billion in the same period a year ago.

Debt service consisted mainly of principal repayments, accounting for more than three-quarters or 73% of the total.

In the January-February period, depreciation payments fell 3.5% to P330.465 billion, compared to P342.466 billion in 2023.

Domestic debt repayments reached P243.763 billion during the period, while foreign obligations payments reached P86.702 billion during the period.

Meanwhile, total interest payments increased by 50.5% over the two-month period to P122.048 billion, compared to P81.079 billion last year.

Foreign interest payments amounted to $38.875 billion in February.

In 2023, NG’s debt service rose to P1.604 trillion, up 19% from 2022’s P1.293 trillion.

According to the latest available budget of expenditure and funding sources, the NG’s debt service program is set at £1.91 trillion this year.