Debt payments of the national government dropped by more than half in October this year due to lower amortization, data from the Bureau of the Treasury showed.
Marcos administration’s debt servicing reached P39.82 billion in October, down 55 percent more O89.06 billion paid out in the same month last year.
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.
Payment of principal fell by 88 percent to P6.63 billion from P57.53 billion in October last year.
Principal payments consist mainly of offshore payments amounting to P5.74 billion.
Meanwhile, interest payments rose by five percent to P33.18 billion from P31.53 billion in 2021.
Of the total, domestic and foreign interest payments reached P22.41 billion and P10.78 billion, respectively.
At end-October, debt payments amounted to P929.66 billion, down 11 percent compared with P1.052 trillion a year ago.
Of that amount, interest and principal payments reached P433.16 billion and P492.5 billion, respectively.
Earlier, the Department of Finance said the government plans to gradually bring down its debt ratio to 51 percent level by the end of the Marcos administration.
For 2022, the debt-to-gross domestic product (GDP) ratio is expected to drop to 61.8 percent before dropping further to 61.3 percent next year.
By 2024, the debt ratio is seen at 60.6 percent, and would hit the internationally accepted threshold of 59.3 percent by 2025.
In 2026, debt to GDP ratio should settle at 57.7 percent and ultimately, 52.5 percent by 2027.
“In other words, by the end of the Marcos years, we expect that national debt to GDP ratio to be below 60 percent,” Finance Secretary Benjamin E. Diokno said.
According to Diokno, debt level of above 50 percent is not detrimental, citing the current global debt to GDP ratio is somewhere between 200 percent and 300 percent.
“This kind of debt structure has nothing to worry about. This is one of the lowest among even emerging economies,” Diokno said. “Skies are not falling because our GDP ratio is 62 percent.
As of end-May 2022, the national government’s debt stock stood at P12.495 trillion.