Debt payments by the Philippine government declined significantly in August due to lower principal payments to domestic creditor, data from the Bureau of the Treasury showed.
The national government's debt servicing reached P75.08 billion last August, 51 percent lower than the P152.39 billion paid out in the same month last year. This brought the eight-month total payments to P909.41 billion.
Debt servicing refers to payments of both interest and principal. The debt service burden excludes actual outflows such as rescheduling or refinancing of existing debt and conversion of debt to equity.
Interest payments increased by 6.1 percent to P23.93 billion last August from P22.55 billion a year earlier. Total interest payments so far this year reached P291.49billion.
Of the total, domestic and foreign interest payments reached P21.3 billion and P2.63 billion, respectively.
Payment of principal declined by 60 percent to P51.15 billion in August from P129.85 billion a year ago.
The August number brought the eight-month principal payments to P617.92billion, consisting of domestic payments of P405.4 billion and foreign payments of P212.58 billion.
Last year, total debt servicing reached P962.46 billion.
As of August, the national government's outstanding debt reached P11.642 trillion, a marginal increase of less than one percent compared with P11.61 trillion in the previous month.
However, the latest outstanding loans soared 21 percent or P2.027 trillion from P9.615 trillion in August 2020.
But despite faster uptick in government debt, Finance Secretary Carlos G. Dominguez III said this level of obligations is still considered manageable, based on the debt-to-gross domestic product (GDP) matrix.
Dominguez explained that governments around the world registered higher borrowings since the pandemic began last year but what sets the Philippines apart “is that we entered 2020 with a historic low debt-to-GDP ratio of 39.6 percent.”
The country’s debt-to-GDP rose to 60.4 percent as of end-June 2021, but credit raters still consider this manageable, the finance chief said.
Based on the Department of Finance’s estimates, the national government’s outstanding debt will hit a record-high P13.41 trillion by end of 2022.