Gov’t debt payments soar in September

Published November 9, 2020, 6:00 AM

by Chino S. Leyco

Debt payments of the national government ballooned in September after the Duterte administration repaid the bridge loan extended by the Bangko Sentral ng Pilipinas (BSP) for the coronavirus response.

Data from the Bureau of the Treasury showed the government’s total debt servicing soared by 664 percent in September this year to P374.06 billion from only P48.92 billion in the same month last year.

According to the Treasury, the spike was due to the P300 billion “advances to BSP.”

To recall, Finance Secretary Carlos G. Dominguez III said the Treasury disbursed P300 billion to the central bank to repay the loan under their repurchase agreement.

Last March, BSP’s policy-making Monetary Board authorized the central bank to purchase government securities from the Treasury to support the government’s programs in addressing the impact of the pandemic.

But days after the Treasury paid the BSP, the government requested the central bank for new P540 billion financing for budget support amid the coronavirus crisis. The fresh advances would be settled on or before December 29 at zero interest.

The bond-buying activity between the BSP and the Treasury is allowed under Republic Act 7653, or the “New Central Bank Act,” but with a maximum repayment period of six-months.

At end-September, the national government’s total debt payments jumped by 103 percent to P1.135 trillion from P558.2 billion in the same period last year.

Amortization in the January to September reached P821.74 billion, up by 211 percent compared with P264.48 billion a year ago. Of that amount, P698.55 billion were paid to local creditors, while the remaining P123.18 billion were to foreign lenders.

Interest payments, on the other hand, increased by 6.5 percent to P312.97 billion in the first nine-months of the year from P293.74 billion in the same period in 2019. Of the total, domestic banks received P224.28 billion, while foreign creditors got P88.69 billion.

Meanwhile, total borrowings of the government hit P90.59 billion in September, which brought its first nine-month tally to a record P2.56 trillion, more than double of P917.28 billion in the same period last year.

At end-September, domestic borrowings soared to P2.010 trillion from P626.28 billion, while external financing jumped from P291 billion to P550.27 billion.

Earlier, Finance Secretary Carlos G. Dominguez III said that borrowings for the year will more than usual due to higher spending requirement for the coronavirus response and lower revenue collections due to slow economic activity.

As of August, the outstanding debt of the national government stood at P9.615-trillion, higher by 4.9 percent, or P451 billion, compared with the previous month’s level of P9.164-trillion.

Of the total debt stock, 69.8 percent are held by Filipino lenders, while 30.2 percent were sourced from foreign creditors.

The total debt as of August translates to an estimated P87,409 share for every Filipino.

Since the beginning of the year, the government’s debt has risen by 24.4 percent, or P1.884 trillion.

In 2020, the Duterte administration expects the outstanding debt will hit more than P10 trillion.