Debt service drops sharply in July

THE GOVERNMENT’S debt service bill halved in July over sharply reduced amortization payments, while interest expenses were little changed, data from the Bureau of the Treasury (BTr) show.

The national government paid P47.21 billion in July, down 52.53% from a year earlier.

However it was 53.5% higher than the P30.76 billion in June.

Some 95% of the payments in July represented interest worth P44.84 billion, which was less than a percentage point higher than the P44.63 billion paid a year earlier.

The payments to domestic and foreign lenders amounted to P24.32 billion and P20.52 billion, respectively.

Amortization on the other hand amounted to P2.37 billion, dropping 95.69% from a year earlier, including P2.1 billion to overseas creditors P273 million to domestic creditors.

The government borrows funds to pay for public projects and programs beyond its ability to finance from the budget, amid an aggressive spending program largely focused on infrastructure.

In the seven months to July period, the government paid a total of P463.11 billion to service debt, down 3.12% from the same period in 2017.

This is equivalent to 63.12% of the programmed P733.74 billion debt service budget for the year, based on the latest Budget of Expenditures and Sources of Financing (BESF) report.

Of the total, 54.58% or P252.76 billion went towards settling principal obligations, and P210.35 billion for interest.

Some 70% or P170.66 billion of the amortization bill in the first seven months went to domestic lenders and P82.01 billion went to foreign funding sources.

Some 66.02% or P138.89 billion worth of interest payments went to the domestic payments for maturing government securities, while P71.46 billion went to external creditors.