November debt service bill slips

THE NATIONAL Government’s (NG) debt service bill slipped by 7.7% in November due to a drop in amortization payments, according to the Bureau of the Treasury (BTr).

Data from the BTr showed debt payments fell to P56.674 billion from P61.393 billion a year earlier.

Month on month, debt payments declined by 27% from P77.76 billion in October.

Interest payments rose by 86% year on year to P48.55 billion in November, accounting for 86% of the total debt service bill.

Interest paid on domestic debt jumped by 89.72% to P35.257 billion. This consisted of P26.026 billion in fixed-rate Treasury bonds, P7.734 billion in retail Treasury bonds and P1.478 billion in Treasury bills.

Interest paid to foreign creditors also increased by 77% to P13.291 billion.

Meanwhile, principal payments slid by 77% to P8.126 billion in November from P35.301 billion a year earlier.

Principal payments on foreign debt slid by 77% year on year to P8.03 billion, while amortization on domestic debt slumped by 54% to P96 million.

“Debt service payments eased in November 2023 as government debt maturities are relatively lower towards the holiday season,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

In the first eleven months of 2023, debt payments rose by 55% to P1.535 trillion from P991.056 billion a year ago.

The bulk of the debt service bill in January to November consisted of principal payments, which jumped by 81.85% to P967.09 billion as of end-November from P531.803 billion a year ago.

Principal payments for domestic debt jumped by 109% to P854.039 billion, while amortization on foreign obligations dropped 7.91% to P113.051 billion.

On the other hand, interest payments went up by 24% to P567.65 billion in the 11-month period from a year earlier.

Interest paid to domestic creditors rose by 12.96% to P392.190 billion. This consisted of P248.69 billion in fixed-rate Treasury bonds, P124.118 billion in retail Treasury bonds and P15.275 billion in Treasury bills.

Interest payments on foreign debt increased by 36.14% to P175.465 billion.

Mr. Ricafort said the debt service bill could be reduced further once the US Federal Reserve and Bangko Sentral ng Pilipinas (BSP) begin their easing cycles.

The BSP has raised its policy rate by 450 basis points (bps) to a 16-year high of 6.5% since it began its tightening cycle in May 2022 to tame inflation.

The government’s debt service budget this year is set at P1.552 trillion — P914.353 billion in amortization payments and P610.665 billion in interest. — A.M.C. Sy