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Manila Bulletin devider Business devider Government debt payments swell 41% in May

Government debt payments swell 41% in May

Published Jul 14, 2024 09:09 pm

The Bureau of the Treasury reported an increase in the national government’s debt payments in May this year, primarily due to larger settlements made to local and external creditors. 

The Marcos administration disbursed P69 billion towards its local and external financial obligations during the month, a 41 percent increase from the P49 billion paid to creditors in the previous year.

These payments have pushed the total debt service for the first five months of the year to P1.22 trillion, representing 47.4 percent of the government's debt service plan for 2024, which totals P2.57 trillion. 

Of this amount, P1.9 trillion is allocated for domestic debt, with the remaining P640 billion earmarked for foreign creditors.

The increase in debt settlements can be largely attributed to increased interest costs, which surged to P61.1 billion in May, almost twice the amount paid a year earlier at P41.3 billion. 

The Treasury data indicated that a big portion of the interest payments made in May went to domestic lenders, totaling P46.1 billion in principal payments from the government, reflecting a 56 percent increase.

Concurrently, the government disbursed P15 billion in borrowing costs to foreign creditors, marking a 27 percent rise. Total interest settlements in the first five months of the year soared by 40 percent to P321.6 billion.

Additionally, the government allocated P7.9 billion in May for principal payments, signifying a three percent increase. 

Most of these amortization payments were directed towards foreign lenders, amounting to P7.8 billion in principal payments, a 56 percent rise from the previous year. In contrast, domestic lenders received P85 million from the government.

At end-May, total principal payments had rose by 52 percent to P895.1 billion. 

Separate data from the Treasury showed that the government’s outstanding debt rose 2.2 percent to P15.35 trillion as of end-May from a month earlier, mainly due to peso depreciation.

As of the first quarter, the government’s debt as a share of the gross domestic product (GDP) stood at 60.2 percent. This was below 61.1 percent a year ago but higher than 60.1 percent at the end of 2023.

The government set its debt-to-GDP ratio target at 60.3 percent this year. It is aiming to bring this down further to 55.9 percent by 2028.

Related Tags

PH debt Debt service Bureau of the Treasury
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